Ask Cathie Wood what her favorite stocks are these days. She's likely to mention Twilio (TWLO 2.80%). It ranks among the top 10 holdings for her Ark Innovation ETF and Ark Fintech Innovation ETF. Wood has also recently scooped more shares of Twilio for her Ark Next Generation Internet ETF.

But Twilio just reported year-over-year revenue growth in the third quarter of only 5%. Still, Wood loves this slow-growing artificial intelligence (AI) stock. Is she crazy -- or crazy like a fox?

A ho-hum story right now, for the most part

Investors reacted positively to Twilio's Q3 update on Wednesday. The company, which operates a customer engagement platform, reported better-than-expected revenue of $1.03 billion. It also handily beat the consensus Wall Street earnings estimate with adjusted earnings of $0.58 per share.

That's the good news. The rest of the story isn't very exciting. As mentioned, Twilio's revenue increased by only 5% year over year. That's not the level of growth you'd expect to see with a tech stock trading at nearly 26 times forward earnings.

Twilio's near-term prospects look decidedly ho-hum as well. The company projects that its revenue will increase between 1% and 2% year over year in the fourth quarter of 2023. Granted, Twilio's divestitures of its ValueFirst and IoT businesses will weigh on growth. However, even adjusted for these transactions, organic revenue growth is only expected to be between 4% and 5% in Q4.

Twilio continues to see headwinds in the cryptocurrency and social media markets. CFO Aidan Viggiano said in the Q3 earnings call that excluding crypto, the company's Q3 organic revenue growth was 11% year over year. The problem is that we really can't exclude crypto in evaluating Twilio's business.

The AI future that could be on the way

With all of that in mind, Wood might truly seem to be at least a little crazy to have loaded up so heavily on Twilio stock. However, she isn't focusing on the company's current challenges. Instead, Wood is envisioning the future that could be on the way for Twilio.

She told CNBC in October that Twilio is one of her top AI picks. Ark Invest believes that the company is in the strongest position to disrupt customer communications using AI. It views Twilio as part of "AI's sleeper wave."

Twilio's management appears to be on the same page as Wood. In August, the company unveiled a new product called CustomerAI. It pairs customer data with predictive and generative AI.

Co-founder and CEO Jeff Lawson said in the Q3 call that CustomerAI will "change how companies operate every customer-facing function." He also thinks that AI will enable companies to serve their customers at one-tenth of the cost they would have to spend without AI.

Lawson added, "[W]e're here to power that future for our customers." He doesn't see any other real competition so far, stating, "[T]here's no one in that market today."

Is Twilio stock a buy?

Risk-averse investors probably won't have a warm-and-fuzzy feeling betting on a future that might or might not happen. That's especially the case with Twilio trading at a relatively high valuation based on its weak sales growth.

However, I think that more aggressive investors could find a lot to like about this stock. If AI can truly enable companies to achieve the cost efficiencies that Lawson predicts, Twilio should grow much larger than its current market cap of around $10 billion. And Cathie Wood could prove to be crazy like a fox for investing so much in this slow-growing AI stock.