Meta Platforms' Muse artificial-intelligence agent is creating a fresh set of winners and losers. Though certain e-commerce and communications platforms stand to benefit from the rollout, one Wall Street firm says it's not clear Twilio will be one of them.
Shares of the cloud communications platform dropped 6.2% to $281.28 after HSBC downgraded the stock to Reduce from Hold with a $211 price target. Analysts warned Friday that investors may have gotten ahead of themselves in pricing in potential gains from Meta's Muse AI agent.
Twilio is the behind-the-scenes service that allows businesses to call, text, and email users. It powers a range of action items that could include ride-share arrival notifications to text verification codes during account logins.
Meta's Muse could go hand in hand with Twilio. While Meta's virtual assistant generates massive amounts of background communications, Twilio provides the pipes to deliver them.
Investors seemed to believe that as millions of people use Meta's new AI assistant, Muse would need to make millions of phone calls and texts, which would in turn generate revenue for Twilio. Investors leaned into this hope, sending shares of Twilio up roughly 30% since Meta launched Muse on Sept. 8.
Wall Street remains quite bullish on the stock though. Twilio stock has risen 96% this year. The average rating on Twilio is Overweight, according to the 33 analysts polled by FactSet.
But HSBC analysts were less optimistic than others, calling the stock's recent rally an overreaction. They cautioned that higher traffic volumes generated by Meta's Muse AI agent won't necessarily translate into meaningful profit growth for Twilio.
"We think Meta's own AI voice stack limits Twilio's ability to capture the highest value share of each Muse interaction," the analysts wrote.
While Muse could drive higher phone call and text volume, Meta doesn't have to use Twilio. HSBC analysts noted that Meta could easily turn to rival providers or hook up directly to wholesale telecommunications networks through a Session Initiation Protocol-an internet-based signaling standard.
HSBC analysts noted that the actual benefit Twilio stands to gain from Muse is far too small to justify the stock's recent rally. They ran a bull-case scenario, which assumes that Meta's Muse receives around 642,000 daily users and 30% of them make a five-minute phone call daily strictly using Twilio. This would add only about $49.2 million in legacy revenue, which is less than 0.8% of Twilio's total projected revenue for fiscal 2026.
The analysts added that Twilio's stock is too expensive, noting that tech giants like Microsoft, Salesforce, and ServiceNow offer more bang for investors' buck because they have delivered stronger earnings growth.
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