Terranova reallocates to Twilio, Generac on AI gains

Joe Terranova, chief market strategist at Virtus Investment Partners, said he has reallocated capital into Twilio Inc. and Generac Holdings, pointing to AI-driven momentum alongside recent revenue and earnings improvements at both companies.

He described the shift as targeting secondary technology beneficiaries that combine strong price momentum with improving fundamentals. Year-to-date, Twilio shares are up more than 70% and Generac shares are approaching a 100% gain.

Terranova highlighted Twilio as an application software beneficiary of AI. The company has been integrating agentic AI into messaging and voice services that management says expands its addressable market. In its most recent quarter Twilio reported revenue of $1.4 billion, up from $1.1 billion a year earlier, and diluted earnings per share of $1.50.

Generac was identified for its exposure to power infrastructure supporting data-center demand. The company reported total net sales of $1.1 billion, a 12% year-over-year increase, with its Commercial and Industrial segment growing 28% to $510 million. Net income rose to $73 million, or $1.24 per share, and the firm reported an expanding backlog for hyperscale data-center customers.

Terranova said the allocation pairs software growth with the physical infrastructure needs of AI workloads. He noted investors are focusing on companies that show both momentum in their stock price and measurable improvement in cash generation and balance-sheet metrics.

He described the two picks as a ‘rare’ confluence of technical momentum and robust fundamentals, added that Twilio’s ability to convert scale into ‘high-margin’ earnings provides a clearer fundamental floor for investors, and said alignment between price momentum and balance-sheet performance is necessary for ‘multi-quarter’ asset performance.