Actually it is not. 1:1 and group chats in Teams are stored in each participants mailbox. Ignore this if you’re using exchange server or other onprem or cloud solution for email than exchange online :^)
Also both are stored in clear text due to compliance reasons.
While SMS is rather insecure protocol, it’s still generally the best way of delivering a new password to users as long as the username is delivered in a different way. This is mainly because it’s one of the only methods generally available that is completely separate from your other communication methods besides calling (but try delivering password via call haha)
Also the SMS should not contain any context to which system it is meant for, this info should be delivered together with the username. It’s sometimes rather easy to guess a username (such as first.lastname or shortened) but gets harder when you need to guess the system as well.
Of course even better way would be to not deliver password at all and let the user reset their passed themselves if there’s a system in place for it. SSPR if you’re in m365. learn.microsoft.com/…/concept-sspr-howitworks
Edit: not sorry for rant these are very interesting topics I love to talk about.