Artificial intelligence (AI) is creating significant growth prospects for various industries, driven by its rapid integration as businesses seek to enhance productivity. According to Ernst & Young’s global strategy consulting division, generative AI could potentially elevate the global gross domestic product (GDP) by as much as $2.4 trillion over the next ten years due to increased productivity. This explains the substantial investments being made by companies and governments worldwide to strengthen their AI infrastructure.
Given this situation, it may be a good time to consider two companies that are already positioned to benefit from the increasing demand for AI: ASML Holding (ASML -2.38%) and Twilio (TWLO 1.61%). Both have seen their prospects enhance due to AI, even though their stock prices are currently facing some short-term challenges. However, these AI stocks may soon experience sharp upward movements, akin to a parabolic increase in price over a brief duration.
1. ASML Holding
ASML specializes in manufacturing and supplying chipmaking machinery to major foundries and chip manufacturers worldwide, playing a vital role in AI advancement. Notably, ASML is the sole producer of extreme ultraviolet (EUV) lithography equipment. The growing demand for AI-focused semiconductor chips has resulted in a heightened need for machinery capable of producing chips at advanced process nodes.
These advanced chips utilize process nodes of 7-nanometers (nm), 5nm, 3nm, and smaller, enabling chipmakers to densely pack transistors, enhancing performance and reducing power consumption, while lowering production costs. Companies like Nvidia, Apple, Qualcomm, and Taiwan Semiconductor Manufacturing are leveraging these advanced nodes for their AI chip production. For example, Apple’s latest iPhones, which utilize AI features, are powered by the A18 chip produced with a 3nm process node, yielding a 15% speed increase over prior models while consuming 20% less power.
Furthermore, Nvidia has transitioned to a 4nm process for its newest Blackwell processors after using the 5nm process for its sought-after Hopper generation. This surge in demand led ASML to report a staggering 170% increase in net bookings for the fourth quarter of 2024, reaching 7.1 billion euros, with 42% designated for EUV machines. ASML anticipates that the sustained demand for EUV due to AI could enable it to reach the upper end of its projected revenue guidance of 30 billion to 35 billion euros for 2025.
2. Twilio
The cloud-based contact center industry is poised for rapid AI adoption, with Twilio emerging as a key player. Their application programming interfaces (APIs) help businesses maintain communication with customers across various platforms, including voice, text, and email. Future Market Insights predicts the AI-powered cloud contact center market could generate nearly $20 billion in revenue by 2034, up from $3.7 billion last year, positively impacting Twilio’s performance.
In 2024, Twilio reported a 7% revenue growth totaling $4.5 billion, with an 11% growth rate in the fourth quarter alone, driven by rising demand for its AI-focused offerings. During the February earnings call, management indicated that 90% of the top 50 AI startups utilized Twilio solutions last year, with around 9,000 customers developing AI communication tools through its platform.
Given that AI adoption in the contact center market is still in its infancy, Twilio has a significant growth opportunity ahead. With a robust customer base of 325,000, many have yet to implement AI solutions, opening potential for cross-selling. Analysts anticipate a 19% increase in Twilio’s earnings for the current year, followed by consistent growth in the next two years. Currently, the stock’s median analyst price target of $160 suggests a potential gain of 61%, reinforcing its position for a parabolic price movement in the upcoming year as adoption of its AI tools improves.
