Twist Bioscience Falls 9% as AI Spending Fears Hit Genomics Stocks

Twist Bioscience (TWST) shares dropped 9% today, joining a broader sell-off in genomics stocks that followed a more than 2% decline in the Nasdaq composite. The tech-heavy index slid after earnings reports from Meta and Tesla failed to allay investor concerns regarding artificial intelligence spending, a sentiment that dragged down sector peers including Illumina (ILMN), which fell 5%.

The decline in Twist’s shares reflects its recent re-rating tied to AI. Since mid-September, the company’s stock narrative has shifted toward its role in AI-driven drug discovery. This pivot began with an agreement to feed antibody data from its laboratories into Eli Lilly’s TuneLab AI drug discovery platform. The momentum accelerated on September 24, when Leerink Partners described Twist as the single most important beneficiary of Anthropic’s push into biology research, a comment that coincided with a 16% jump in the stock price.

The operational logic behind this valuation is that AI models designing proteins still require physical DNA to be built and tested in a laboratory setting. Emily Leproust, Twist’s chief executive officer, noted on the fiscal third-quarter earnings call in August that AI is creating more sequences than anticipated. This demand dynamic helped the stock more than quadruple over the past year through Wednesday’s close, but it also tethered the shares to general AI market sentiment. When investors sold AI-related equities today, Twist was included in that trade.

The AI premium is evident in the company’s valuation metrics. Twist traded at 18 times forward sales at Wednesday’s close, a multiple more than double its five-year average of 8.3 times. Today’s drop brings that multiple closer to 16 times, which remains approximately twice the historical average.

Despite the volatility, the underlying business continues to expand. In the fiscal third quarter, ending in June, revenue increased 23% to $118.4 million, marking the 14th consecutive quarter of sequential growth. Management raised its fiscal 2026 revenue forecast to a range of $456 million to $457 million. Analysts expect approximately 20% growth in fiscal 2027, and the consensus price target has risen from $39 a year ago to $164.

The next key checkpoint for investors is Twist’s fiscal fourth-quarter report, due in the coming weeks. Current guidance implies record revenue of about $124 million for the September quarter, along with breakeven adjusted EBITDA for that period.