The rapid adoption of artificial intelligence (AI) has significantly boosted tech stocks over the past two years, as evidenced by the 77% gains recorded by the Nasdaq-100 Technology Sector index during this period. But not all tech stocks have benefited from the rise of the AI-powered tech sector.

Zoom video communications (NASDAQ:ZM) And Twilio (NYSE:TWLO) are two of these names. While Zoom stock is down 8% over the past two years, Twilio has gained a measly 13%. Both companies experienced a significant slowdown in business as a result of the pandemic, but both are now looking to reignite growth with the help of AI.

Let’s take a closer look at the AI-related prospects of Zoom and Twilio and check which one might be better. AI Actions buy now.

The case of Zoom Video Communications

Zoom is known for its communication platform that allows users to connect with each other using different modes such as video, audio, chat, and voice. The company’s videoconferencing platform gained immense traction during the pandemic, when working from home and online education gained popularity.

However, as the following chart shows, the company’s recent growth has not been as rapid as it was during the pandemic.

ZM revenue (annual) data by Y Charts

For example, the company’s revenue in the second quarter of fiscal 2025 (which ended July 31) grew just 2.4% year-over-year to $1.16 billion. dollars. No-GAAP net income rose just 3.7% year over year to $1.39 per share. Consensus estimates aren’t very optimistic about Zoom’s growth either. Its revenue is expected to improve only 2.5% in the current fiscal year to $4.64 billion.

Even the long-term outlook doesn’t look very bright, as analysts expect the company’s financial results to grow at a compound annual growth rate of just 1.5%. However, it is worth noting that the integration of AI tools within Zoom’s platform could lead to improved customer spending as well as growth in its customer base.

The company introduced an AI assistant known as Zoom AI Companion in September last year, and has since made improvements to this platform. Whether it’s allowing users to write responses to discussions, catching up on meetings already in progress, or generating meeting summaries, Zoom has introduced a number of AI-powered features to improve the usefulness of its offers.

Zoom recently introduced version 2.0 of its AI Companion, which will help users summarize and access information from several workplace collaboration applications such as Microsoft Outlook, Google Calendar, Gmail and others. The updated AI assistant will also help users decide their next steps after meetings, along with several other features such as generating new content.

Zoom’s AI capabilities are gaining traction with customers, as management highlighted in its August report. earnings conference call. This likely explains why customers are now spending more money on its platform. The number of customers contributing more than $100,000 in trailing 12-month revenue in the prior quarter increased 7% year-over-year.

As a result, the company’s remaining performance obligations (RPO), which refers to the total value of a company’s future contracts that have yet to be executed, increased 8% year over year for reach $3.78 billion. The faster increase in RPO relative to Zoom’s revenue growth is a sign that its growth rate is likely to improve in the future.

Unsurprisingly, Zoom raised its full-year revenue guidance when it reported its results in August. Analysts have also recently raised their expectations for Zoom’s earnings growth.

ZM EPS Estimates for the Current Fiscal Year data by Y Charts

With the global workplace collaboration app market expected to double in size by 2027 to $71.6 billion, according to market research firm IDC, Zoom has a strong opportunity to incremental growth that it could harness with the help of AI.

The case of Twilio

Twilio has made a name for itself helping customers migrate their contact centers to the cloud, and the enterprise experienced incredible growth after its IPO in June 2016. However, Twilio saw strong slowdown in growth recentlyalthough there is no denying that things have started to improve.

The company’s third-quarter 2024 revenue increased 10% year-over-year to $1.13 billion. Twilio expects organic revenue growth to be between 7% and 8% for the full year. Analysts, on the other hand, expect overall revenue to rise just 6%, to $4.42 billion. However, forecasts for the coming years suggest a slight acceleration in growth.

TWLO Revenue Estimates for the Current Fiscal Year data by Y Charts

Twilio’s AI offerings help its customers reduce their customer acquisition costs and improve customer lifetime value. Since Twilio already has a huge active base of 320,000 customers, it is in a good position to sell them its new AI offerings and gain a larger share of their wallet.

The company’s AI-driven offerings, such as CustomerAI, help its customers use its customer data platform to gain better insights into customer behavior, leading to improved engagement and sales. Twilio’s 105% dollar net expansion rate in the third quarter indicates that its existing customer base is spending more money on its offerings.

This metric compares revenue generated by Twilio customers at the end of a particular quarter to revenue generated by the same customer base during the previous year. So, a reading above 100% means these customers have increased their use of the Twilio platform or adopted more of its solutions.

More importantly, the company is expanding into new AI-driven niches it could also help it tap into multibillion-dollar markets such as conversational AI assistants. Overall, it won’t be surprising to see an uptick in Twilio’s growth in the future due to its AI-centric efforts and strong customer base.

The judgment

It’s now clear that there isn’t much that separates Twilio and Zoom. Both companies are currently growing slowly, although Twilio is growing slightly faster. As for valuation, while Zoom trades at 5x sales, Twilio sports a price/sales ratio of 3.4. Both companies’ forward earnings multiples are also cheap, given that the Nasdaq-100 the index has a forward price-to-earnings ratio of 30.

ZM PE ratio (forward) data by Y Charts

Ultimately, Zoom and Twilio are inexpensive stocks to buy right now, and their growth could accelerate in the future thanks to AI. So, investors might consider buying either of these two stocks, although those looking for better value and slightly faster growth might be tempted to buy Twilio over Zoom.

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Hard Chauhan has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Microsoft, Twilio and Zoom Video Communications. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.