3 Brilliant Growth Stocks to Buy Now and Hold for the Long Term

Key Points

• The combination of Twilio’s established business and access to more contemporary AI tech makes it a formidable player.

• The era of artificial intelligence-designed medicine isn’t a mere idea anymore. It’s reality.

• While Palantir remains a far bigger AI company, C3.ai’s solutions are proving increasingly more marketable for a reason.

• 10 stocks we like better than Twilio ›

Market darlings like Nvidia and Palantir Technologies are still solid investment prospects to be sure. After several years of big gains, however, these crowded trades are starting to show signs of age. It may be time to start looking for the next generation of winners.

To this end, here's a closer look at three brilliant growth stocks you might want to take long-term stakes in now. It will come as no surprise that all three of them are artificial intelligence (AI) plays.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

1. Twilio

In retrospect, Twilio (NYSE: TWLO) was ahead of its time.

This cloud-based communications platform, launched back in 2008, automated a variety of interactions between companies and their customers, including mobile text messages, web-based chats, and even voice communications using speech-recognition technologies. In many ways, this was artificial intelligence. The world just didn't recognize it as AI yet, since more familiar platforms like OpenAI's ChatGPT and Google's Gemini (originally known as Bard) wouldn't launch until years later.

Newer AI technology is much more powerful than Twilio's original solutions, of course. That's just the nature of any technology -- it's always improving. That's why Twilio is using more contemporary AI in its apps, like its customer service chat "bots" capable of interacting with an individual customer just as a live service agent would. The company's Flex contact center tech, meanwhile, supports higher-level analysis of individual customers in a way that can predict their needs and identify cross-selling and upselling opportunities.

More to the point for investors, all of it is working. Its first-quarter customer count of 335,000 is up 7% from the year-earlier figure of 313,000, inflating revenue by 12% to $1.17 billion to extend a long-established streak of steady growth that's expected to persist for at least a few more years.

Data by YCharts.

The thing is, now that AI-powered customer service is proven to work as needed, Twilio's leading position in this space provides it with some serious marketing firepower. It should be able to win more than its fair share of the 36.5% annualized growth that Roots Analysis predicts for the AI service-agent industry through 2035.

2. Recursion Pharmaceuticals

Given what AI can already do, paired with its never-ending improvement, most people assume it's only a matter of time before AI is used to create new medicines.

Except, that future is the present. A company called Recursion Pharmaceuticals (NASDAQ: RXRX) is doing it. Using its access to 65 petabytes' (65 million gigabytes) worth of biological, chemical, and molecular data, in a matter of mere days, its Recursion OS can virtually simulate a drug trial that would normally require years to complete.

Recursion Pharmaceuticals' technology doesn't replace an actual clinical trial, to be clear -- actual patient-testing must still be done to satisfy regulatory agencies. There's still a reason Roche, Sanofi, and a handful of other outfits are still utilizing this tech, though. That is, with 90% of clinical drug trials failing rather than ending in approval (pumping the average developmental cost of an approved drug up to $2 billion), these pharmaceutical companies are simply looking to make the most of their limited resources by focusing on their most promising prospects by first running their ideas through Recursion's cost-effective platform.

Recursion is working on some of its own drugs, too, by the way, three of which are oncology drugs in early-stage clinical trials.

Now, this stock isn't exactly easy to own. The company is currently unprofitable and is likely to remain in the red for at least a few more years. This translates into stock price volatility. The company is clearly making progress, though, with analysts expecting revenue to more than triple by 2027, halving losses as a result. You'd need to buy this stock with a long-term mindset to stomach the volatility that it's sure to experience as the market rewards this progress.

C3.ai

Finally, add C3.ai (NYSE: AI) to your list of brilliant long-term growth stocks to buy.

It's an artificial intelligence company, but it wouldn't be surprising if you've never heard of it. With a market cap of only $3 billion, C3.ai is a fraction of the size of the aforementioned Palantir (also a rival), after all, reporting a mere $389 million worth of revenue for its recently ended fiscal year.

Don't let its small size fool you, though. C3.ai is capable of producing growth even in an industry dominated by much bigger outfits. Last year's top line was up 25% year over year, and analysts are looking for comparable growth rates for the next three years -- enough revenue growth to push the company out of the red and into the black by the end of that stretch.

This seemingly unlikely growth reflects the business world's adoption of AI solutions that are just now starting to take shape in earnest.

It's true. For all the hype that's surrounded AI so far, most for-profit enterprises haven't actually embraced it yet. As the Motley Fool's own research arm points out, only about 10% of companies in the United States are using AI. The other 90% aren't. Even most technology companies aren't utilizing these tools yet. That may be because, while popular decision-making platforms like Palantir's Foundry and AIP are powerful, they're more than most businesses need. This is in contrast with C3's portfolio of more than 130 simpler enterprise-specific apps like demand forecasting, logistics optimization, predictive maintenance, and customer relationship management tools, just to name a few.

With Mordor Intelligence expecting this enterprise AI market to grow at an average annualized rate of nearly 19% through 2030, C3.ai is a very promising long-term prospect. It's not a bad bet in the meantime, either, though. Analysts' current 12-month consensus price target of $29.43 is 28% above the stock's present price.

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James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Nvidia, Palantir Technologies, and Twilio. The Motley Fool recommends C3.ai and Roche Holding AG. The Motley Fool has a disclosure policy.