Why Bandwidth Stock Was Rising This Week

Investors were eagerly calling on next-generation communications company Bandwidth (NASDAQ: BAND) over the past few days. Much of this enthusiasm can be traced to a significant price target raise from an analyst tracking the telecom stock. According to data compiled by S&P Global Market Intelligence, as of early Friday morning, the stock was up 14% week to date.

An AI stock to buy, says analyst

Well before market open on Thursday, B. Riley's Erik Suppiger pulled the lever on that price target increase. It was quite a change -- the analyst now believes the stock can hit $85 per share; his previous fair value assessment was $55. He maintained his buy recommendation on the stock.

Bandwidth specializes in the infrastructure required to route artificial intelligence (AI) voice applications, and the analyst believes advances in the technology will increase demand for its network services, according to reports. The analyst added that he had raised his full-year 2027 estimates in light of this anticipated development.

Suppiger added that numerous developers are laboring to make AI voice more natural and expansive, to the point where it can act as an agent for users. Given the nature of its business, Bandwidth should be able to capitalize on this trend as well.

The power of potential

Could this mean more hot growth for Bandwidth? In the first quarter of this year, the company's revenue surged 20% year-over-year to $209 million, while net income not under generally accepted accounting principles rose 18%.

This company not only operates in a somewhat under-the-radar niche in modern communications but also seems to have considerable upside, given likely advances in its foundational technology. I'm buying this buy recommendation.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Bandwidth. The Motley Fool has a disclosure policy.