5 Best Cloud Stocks To Buy Now

3. Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 96   

Goldman Sachs analyst Kash Rangan recently initiated coverage of Twilio Inc. (NYSE:TWLO) stock with a Buy rating and a price target of $350. The analyst noted that the cloud penetration in the communication sector, which had a market of close to $20 billion, was just 7% in 2020 and slated to grow to 29% in 2025. Twilio Inc. (NYSE:TWLO), as a market leader in this regard, will be one of the biggest beneficiaries of this growth. 

Hedge funds remain bullish on Twilio Inc. (NYSE:TWLO) for 2022. California-based investment firm SCGE Management is a leading shareholder in Twilio Inc. (NYSE: TWLO) with 2.7 million shares worth more than $887 million. 

In its Q3 2021 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Twilio Inc. (NYSE:TWLO) was one of them. Here is what the fund said:

“TWLO shares were also a top detractor for the quarter. Just like after 1Q, despite another quarterly beat in 2Q, management guidance–which we believe to be conservative–disappointed some investors. Second quarter revenue of $669 million was up 67% year over year, significantly exceeding management’s guidance of 47%-50% revenue growth. Management guided 3Q21 revenue to 50%-52% revenue growth, which was ahead of expectations, but due to continued investment also guided to a non-GAAP operating loss of $25 million-$30 million, which was below the Street’s forecast of a $12 million loss.

The COVID crisis has accelerated the adoption of the company’s cloud-based, integrated communications platform that allows companies in a wide range of businesses to embed digital communications capabilities (video, chat, voice, SMS, fax, and email) into their customer facing applications without needing to build back-end infrastructure and interfaces. Twilio’s total addressable market is now greater than $40 billion, which should grow by 50% over the next few years, providing a strong secular tailwind for the company. We expect the company’s gross margin to continue to expand from 54% in the second quarter toward management’s long-term goal of 60%-65%, and, as the company grows to scale, we expect its non-GAAP operating margin to expand to 25%.”