20 Fintech Stocks Riding the AI Wave Higher

03. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 87

PayPal Holdings, Inc. (NASDAQ:PYPL) is a global leader in digital payments, providing a technology platform that connects merchants and consumers through its two-sided network. Founded in 1998 and headquartered in San Jose, California, PayPal Holdings, Inc. (NASDAQ:PYPL) enables seamless online and in-person transactions, facilitating payments through various methods, including credit and debit cards, bank accounts, cryptocurrencies, and digital wallets such as Venmo and PayPal Credit. With its broad suite of services under brands like Braintree, Venmo, and Honey, PayPal Holdings, Inc. (NASDAQ:PYPL) is firmly positioned as a fintech giant, especially as it capitalizes on the growing digitization of payments.

In recent discussions, AI has played a significant role in shaping PayPal Holdings, Inc. (NASDAQ:PYPL) strategy. The company has been focusing on leveraging AI to enhance its consumer and merchant experiences. AI-driven innovations such as PayPal’s Fastlane and Ads platform are expected to improve transaction efficiency and provide deeper insights into consumer behavior, giving the company a technological edge. For example, early adopters of Fastlane have reported an 80% conversion rate, significantly higher than the industry average. These AI-powered innovations are expected to drive PayPal’s growth in the coming years.

Despite these technological advancements, PayPal Holdings, Inc. (NASDAQ:PYPL) faces growing competitive pressures. On October 10, Bernstein downgraded the stock from Outperform to Market-Perform, citing concerns over intense competition and uncertainty around PayPal’s long-term growth trajectory. The firm raised its price target from $75 to $80 but indicated that PayPal’s recent share price performance left limited upside potential. Bernstein also noted that while PayPal Holdings, Inc. (NASDAQ:PYPL) core product offerings remain strong, initiatives like “PayPal Everywhere” and its newer campaigns have yet to significantly impact consumer preferences or boost profits. Additionally, Venmo’s share in peer-to-peer transactions is shrinking, and Braintree’s pricing changes are causing uncertainty in future growth prospects.

In its Q2 2024 earnings call, PayPal Holdings, Inc. (NASDAQ:PYPL) reported strong financials, with earnings per share exceeding expectations at $1.19. However, while the company is focused on leveraging AI and other technological innovations to drive future growth, analysts remain cautious about competitive challenges and market headwinds in the long term.