Shares of Twilio Inc. surged on Friday after the company delivered stronger-than-expected first-quarter results, standing out in a software sector that has struggled for positive momentum in 2026.
The stock rose about 21% to $180.79, hitting a four-year high in the session.
The rally extends Twilio’s gains to roughly 30% year-to-date and more than 84% over the past 12 months, marking a sharp reversal from broader industry weakness.
Twilio’s performance contrasts with the iShares Expanded Tech-Software Sector ETF, which is down about 21% this year amid concerns that artificial intelligence could disrupt traditional software models.
Strong earnings and revenue growth surprise markets
Twilio reported adjusted earnings of $1.50 per share for the quarter ended March 31, beating analyst expectations of $1.27 and rising from $1.14 a year earlier.
Revenue increased 16% on an organic basis to $1.41 billion, surpassing forecasts of $1.34 billion.
The company also guided for second-quarter revenue of $1.425 billion, ahead of consensus estimates, while maintaining expectations for adjusted earnings per share in line with projections.
“Twilio had a terrific Q1, accelerating revenue and gross profit to their highest growth rates in more than three years,” said CEO & Director Khozema Shipchandler in a statement.
The company raised its full-year free cash flow outlook, increasing the midpoint estimate to $1.09 billion from $1.05 billion.
Analysts responded positively to the results, with several firms raising price targets.
Wells Fargo lifted its target to $200, while BTIG increased its target to $215 and maintained the stock as a “top pick.”
“After several years of increased innovation and tighter financial rigor, efforts are manifesting in a materially healthier financial profile and growth trajectory,” wrote BTIG analyst Nick Altmann.
AI integration drives growth and customer demand
Twilio’s recent momentum has been supported by its growing use of artificial intelligence across its platform, particularly in messaging and voice services.
The company’s AI tools allow enterprises to streamline customer support and integrate their own large language models into Twilio’s infrastructure.
Its VoiceAI offering has been a key driver, contributing to a sixth consecutive quarter of accelerating growth in the voice segment, according to analysts at Oppenheimer.
“The Voice AI story appears to be taking shape, which likely gives investors confidence to stick around in the name longer. The setup for the rest of the year also now appears better, even as the comps get more challenging,” wrote Wells Fargo analyst Ryan MacWilliams.
AI is also encouraging customers to consolidate communication channels onto unified platforms, a trend that analysts believe could further benefit Twilio, even if the full impact has yet to appear in financial results.
Margin pressure and technical resistance in focus
Despite strong top-line growth, margins remain an area of focus for investors.
Twilio’s adjusted gross margin declined to 49% from 50% a year earlier, partly due to higher-than-expected costs.
KeyBanc analyst Jackson Ader noted that the cost of revenue came in about $18.3 million above expectations, contributing to the margin pressure.
From a technical perspective, the stock is approaching a key resistance level around $175, a price zone that previously acted as both support and resistance in 2022.
Analysts note that such levels can attract selling pressure as investors seek to exit positions at breakeven.
Momentum indicators suggest further upside may be possible.
The relative strength index remains below overbought levels, while rising trading volume supports the recent breakout attempt.
As Twilio navigates margin pressures and technical hurdles, its ability to sustain AI-driven growth and capitalize on improving demand trends will remain central to investor sentiment in the months ahead.
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