In this piece, we will take a look at 20 fintech stocks that are riding the AI wave higher.
Artificial intelligence (AI) is redefining how financial services operate, bringing new waves of innovation while enhancing efficiency and decision-making across the sector. From automating mundane processes to personalizing customer experiences, AI has firmly established itself as a game-changer, and nowhere is this more evident than in the fintech space. In recent years, the rise of generative AI (GenAI) models, like OpenAI’s GPT, has accelerated this transformation. These tools do more than process data, they generate meaningful content, automate workflows, and unlock insights in ways traditional AI could never achieve.
Banks and financial institutions worldwide have been quick to adopt AI, not just as a passing trend but as a strategic necessity. Many of the world’s leading banks, particularly those in North America, have allocated substantial resources toward building AI infrastructure and talent. They’re investing heavily in areas like fraud detection, customer service chatbots, and personalized financial products. The deployment of specialized hardware further underscores the commitment to refining processes, managing risk, and scaling AI-powered innovations. These investments are already paying off, leading to more efficient operations, improved profitability, and enhanced customer satisfaction.
GenAI’s impact extends beyond operational efficiency, touching nearly every facet of banking. Whether it’s speeding up loan applications, optimizing compliance procedures, or creating predictive investment strategies, AI is empowering financial institutions to meet increasingly high customer expectations. Banks are also leveraging AI to stay ahead of the curve by countering competition from tech giants and emerging business models like embedded finance, where financial services are seamlessly integrated into non-financial platforms.
The benefits of AI are not confined to banks alone; the ripple effects are felt across other areas of finance, such as wealth management, insurance, and payment solutions. AI tools are transforming the way these sectors operate by offering real-time insights, personalized recommendations, and automated claims processing. For instance, AI-driven financial advisory platforms are enabling wealth managers to provide tailored advice more efficiently. Similarly, insurance companies are using AI to streamline claims handling, improving both customer experience and internal operations.
However, the rapid adoption of AI is not without challenges. Integrating AI into financial services introduces complexities, such as the “black box” problem, where the logic behind AI decisions becomes difficult to interpret. There are also concerns about biases in algorithms, data privacy, and the potential for job displacement. To address these issues, financial institutions are working toward building robust governance frameworks that ensure transparency, fairness, and accountability in AI operations. Banks are not just adopting AI for the sake of it, they are also focused on developing ethical AI solutions that align with regulatory requirements and maintain trust with customers.
AI’s influence is also reshaping the cybersecurity landscape for fintechs. While AI strengthens defenses by detecting threats and automating responses, it simultaneously increases the attack surface, creating new vulnerabilities for malicious actors to exploit. Financial institutions must strike a careful balance, deploying AI to improve security while also ensuring that these systems remain protected from manipulation. Collaborative efforts among banks, tech firms, and regulators are essential to creating secure AI ecosystems that minimize risks without compromising innovation.
According to KPMG, global fintech investment reached $51.9 billion across 2,255 deals in first half of 2024, down from $62.3 billion in second half of 2023. The Americas led with $36 billion, while Europe, the Middle East, and Africa (EMEA) saw investment drop to $11.4 billion. Meanwhile, the Asia-Pacific (ASPAC) region secured $3.7 billion. Despite a slight dip, M&A activity shows promise, with $32.6 billion recorded, already outpacing 2023’s $58.8 billion total.
The payments sector remains dominant, attracting $21.4 billion, driven by major buyouts. AI-focused fintech is also thriving, especially in the U.S., with deals like Ramp and FundGuard securing large funding rounds. Investors are increasingly drawn to AI-powered solutions, behavioral intelligence, and new markets in Southeast Asia and Africa.
Although high-interest rates have slowed some larger transactions, the second half of 2024 may see renewed focus on areas like Central Bank Digital Currencies (CBDCs) and ESG fintech, suggesting opportunities for future growth.
In this evolving landscape, fintech companies are at the forefront of harnessing AI’s potential to transform financial services. With AI technologies now embedded across everything from fraud prevention systems to investment platforms, the fintech sector is riding a wave of momentum toward new growth and opportunities. Companies that effectively integrate AI not only enhance their internal efficiencies but also create new revenue streams and build stronger customer relationships.
This article explores 20 fintech stocks that are capitalizing on the AI revolution, riding the wave of innovation to new heights. As AI becomes more integral to financial services, these companies are positioned to lead the charge in shaping the future of the industry, one that’s more efficient, secure, and customer-centric than ever before. Whether you’re an investor seeking exposure to cutting-edge technology or someone interested in the future of finance, these fintech players are worth keeping an eye on.
Our Methodology
For this article we picked 20 fintech stocks that are making big moves on the back of latest news. With each company we have mentioned the number of hedge fund investors, which were taken from Insider Monkey’s Q2 database of 912 hedge funds.. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
20. Lightspeed Commerce Inc. (NYSE:LSPD)
Number of Hedge Fund Holders: 13
Lightspeed Commerce Inc. (NYSE:LSPD) is a key player in the fintech space, providing cloud-based software solutions that enable businesses to manage operations, engage customers, and accept payments across multiple locations. The company serves a diverse set of industries, including retail, restaurants, and hospitality, with a comprehensive platform designed for efficiency and growth.
What sets Lightspeed Commerce Inc. (NYSE:LSPD) apart is its integrated payments system, which continues to gain traction, as well as its use of AI to enhance service offerings like inventory management and product photo enhancements. These AI-powered tools are boosting merchant sales by improving product presentation and operational efficiency, further solidifying Lightspeed’s role in the AI-driven fintech landscape.
In recent months, analysts have taken a bullish stance on Lightspeed Commerce Inc. (NYSE:LSPD) prospects. Notably, BMO Capital analyst Thanos Moschopoulos raised the price target for Lightspeed Commerce Inc. (NYSE:LSPD) from $18 to $20, citing the company’s strategic review and potential buyout interest. The stock is seen as undervalued, with considerable potential for upside given its scale, earnings power, and payments penetration. Lightspeed Commerce Inc. (NYSE:LSPD) payments penetration rose to 36% in the first quarter of fiscal 2025, compared to 22% the previous year, a clear indicator of its growing influence in the financial technology market.
Lightspeed Commerce Inc. (NYSE:LSPD) recent financial performance has been strong. In its Q1 2025 earnings, the company exceeded expectations, reporting an EPS of $0.10 versus an expected $0.06. Revenue also grew by 27% year-over-year to $266.1 million, and adjusted EBITDA came in at $10.2 million, a significant improvement from last year’s loss of $7 million. This growth is driven by increased adoption of its financial services and a focus on cost control, which has allowed Lightspeed Commerce Inc. (NYSE:LSPD) to achieve profitability ahead of schedule.
With a clear path to continued growth, increased payments penetration, and the effective use of AI, Lightspeed Commerce Inc. (NYSE:LSPD) is well-positioned to capitalize on the fintech and AI wave, making it an attractive stock for investors looking to tap into the next phase of digital transformation.
Conestoga Capital Advisors stated the following regarding Lightspeed Commerce Inc. (NYSE:LSPD) in its Q2 2024 investor letter:
“Lightspeed Commerce Inc. (NYSE:LSPD): LSPD is a leading cloud-based software and payment solutions provider to the retail and hospitality industries. Following last quarter’s weak earnings and CEO change, we arrived at the conclusion that there had been fundamental deterioration leading to significant changes in corporate strategy and management. We redeployed funds to holdings with better fundamental outlooks.”
19. Lemonade, Inc. (NYSE:LMND)
Number of Hedge Fund Holders: 17
Lemonade, Inc. (NYSE:LMND) is a fintech company revolutionizing the insurance industry by leveraging AI to streamline operations and enhance customer experience. Founded in 2015, the company offers various insurance products including renters, homeowners, car, pet, and life insurance across the United States, Europe, and the United Kingdom. What sets Lemonade apart as a fintech is its use of AI technology, which powers everything from underwriting to customer interactions. AI helps Lemonade, Inc. (NYSE:LMND) rapidly assess claims, reducing response times and operational costs, making it highly efficient compared to traditional insurers.
A significant aspect of Lemonade, Inc. (NYSE:LMND) AI involvement is its commitment to a tech-first approach, as discussed in its Q2 2024 earnings call. Co-founder Shai Wininger highlighted the company’s progress in utilizing AI to improve underwriting processes and enhance operational efficiency. Lemonade’s AI-driven insurance stack is designed to automate a large portion of its business functions, helping the company scale while keeping costs low. Their next-generation technology platform, L2, is expected to bring further improvements in underwriting and product development, positioning Lemonade to capitalize on new opportunities in the AI era.
From an analyst perspective, Jefferies recently lowered its price target for Lemonade, Inc. (NYSE:LMND) to $14 from $15, maintaining an Underperform rating on the stock. The analyst pointed out potential risks for the insurance sector in Q3 2024 due to Hurricane Milton, which could overshadow positive results. Despite these challenges, Lemonade has shown improvement in its margins and policies-in-force, driven by the company’s focus on products with lower catastrophe exposure, such as pet and renters insurance.
In its Q2 2024 earnings report, Lemonade, Inc. (NYSE:LMND) demonstrated solid financial performance with a 22% year-on-year growth in gross earned premiums. While the company’s loss ratio came in at 79%, an improvement from the previous year, the impact of convective storms and winter storm activity added volatility. However, Lemonade, Inc. (NYSE:LMND) use of AI to manage risk and diversify its product portfolio has helped stabilize its loss ratios and improve gross margins.
As Lemonade, Inc. (NYSE:LMND) continues to integrate AI into its operations, the company is well-positioned to grow in the evolving insurtech landscape, despite near-term challenges highlighted by analysts.
18. Enfusion, Inc. (NYSE:ENFN)
Number of Hedge Fund Holders: 17
Enfusion, Inc. (NYSE:ENFN) is a prominent provider of software-as-a-service (SaaS) solutions specifically tailored for the investment management industry. Headquartered in Chicago, Illinois, the company offers a comprehensive suite of tools, including a Portfolio Management System (PMS) that generates a real-time investment book of record, and an Order and Execution Management System (OEMS) that facilitates seamless communication and compliance among portfolio managers, traders, and compliance teams.
Enfusion, Inc. (NYSE:ENFN) reported a revenue of $49.5 million for Q2 2024, representing a year-over-year growth of 16%. The adjusted EBITDA margin of 20.5% reflects the company’s ability to maintain profitability while expanding its services.
Recent developments indicate that Enfusion, Inc. (NYSE:ENFN) is strategically scaling its engineering and product teams to accommodate an increasing number of larger asset managers adopting its platform. The appointment of Arman Artuc as Head of Engineering signifies a commitment to enhancing technological capabilities, particularly in algorithmic trading solutions. This aligns with the company’s goal of delivering cutting-edge investment solutions to its growing clientele, which now oversees over $1 trillion in net assets across 900 asset managers.
In its latest earnings call, Enfusion, Inc. (NYSE:ENFN) highlighted its ongoing investment in client services and technology to support its expansion into the institutional asset management sector. The firm signed 39 new clients in Q2 2024, a significant increase from the previous quarter, indicating strong market demand. Enfusion, Inc. (NYSE:ENFN) focus on leveraging AI to streamline operations and improve compliance is expected to drive continued growth as it targets larger, more complex firms.
Overall, Enfusion, Inc. (NYSE:ENFN) presents a compelling investment opportunity in the fintech sector, particularly as it capitalizes on the AI wave to enhance its service offerings and meet the evolving needs of asset managers.
NCG Small Cap Strategy stated the following regarding Enfusion, Inc. (NYSE:ENFN) in its Q2 2024 investor letter:
“Enfusion, Inc. (NYSE:ENFN) is a software company with a modern order execution management and portfolio accounting solution for asset managers. The addressable market is large and ripe for disruption as it is dominated by legacy competition with outdated technology. We believe the company is set up for healthy revenue growth and margin expansion in the years ahead.”
17. Upstart Holdings, Inc. (NASDQ:UPST)
Number of Hedge Fund Holders: 18
Upstart Holdings, Inc. (NASDQ:UPST) operates a cutting-edge, cloud-based AI lending platform in the United States. Founded in 2012 and headquartered in San Mateo, California, the company connects consumer demand for personal loans, auto loans, home equity lines of credit, and small-dollar loans with banks and credit unions. Upstart Holdings, Inc. (NASDQ:UPST) leverages AI and machine learning (ML) to assess credit risk and offer personalized loan terms, setting it apart as a significant player in the fintech space. AI is deeply integrated into its business model, improving the efficiency and accuracy of credit assessments and enhancing its competitiveness in the fintech sector.
AI plays a central role in Upstart Holdings, Inc. (NASDQ:UPST) operations, particularly through its advanced credit risk models. One major milestone was the introduction of Model 18 (M18), which generates over 1 million predictions per loan applicant, allowing the company to fine-tune annual percentage rates (APR) with exceptional accuracy. By using AI to automate 91% of its loan approvals—up from 73% two years ago—Upstart has significantly reduced the need for human intervention, making the loan process faster and more efficient for borrowers while maintaining robust fraud detection capabilities.
From an investment perspective, analysts have shown increasing confidence in the stock. On September 20, 2024, Mizuho raised its price target for Upstart Holdings, Inc. (NASDQ:UPST) to $48 from $33, maintaining an “Outperform” rating. Mizuho cited improving market valuations and a favorable lending environment spurred by lower interest rates as key reasons for the upgrade. The firm also increased its valuation multiple from 4x to 6x, reflecting heightened optimism about growth prospects in the financial technology sector.
In the company’s Q2 2024 earnings call, CEO Dave Girouard emphasized that Upstart Holdings, Inc. (NASDQ:UPST) AI-driven improvements are driving its growth and profitability. Notably, Upstart continues to expand its reach in auto loans and home equity lines of credit (HELOC), with zero defaults on over 300 HELOCs originated to date. Upstart Holdings, Inc. (NASDQ:UPST) AI-driven innovations and expanded product offerings make it a key fintech stock to watch.
16. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 29
SoFi Technologies, Inc. (NASDAQ:SOFI) is a fintech company providing a wide range of financial services across the United States, Latin America, and Canada. SoFi’s operations are segmented into Lending, Technology Platform, and Financial Services, offering products such as personal loans, home loans, and investment services. The company’s involvement with AI sets it apart in the fintech industry. SoFi Technologies, Inc. (NASDAQ:SOFI) leverages AI-driven fraud detection in its technology platform, which powers services for both financial and non-financial institutions. AI is also integrated into SoFi’s transactional risk management systems, enhancing security for digital transactions.
Analysts maintain a positive outlook on SoFi Technologies, Inc. (NASDAQ:SOFI) stock, highlighting its potential for continued growth. Mizuho, for instance, retained an “Outperform” rating with a price target of $12, underscoring the company’s strong Q2 2024 performance, which helped counter many bearish arguments. Mizuho noted that sequential declines in personal loan delinquencies should help ease credit concerns. Analysts believe that as SoFi’s management continues to execute its strategy, bearish sentiments around the stock will eventually dissipate.
In its Q2 2024 earnings report, SoFi Technologies, Inc. (NASDAQ:SOFI) beat expectations with earnings per share (EPS) of $0.01634, exceeding the anticipated $0.01. CEO Anthony Noto discussed the company’s impressive growth, emphasizing its diversification and innovation. A significant part of SoFi’s success lies in its robust technology platform, which Noto described as being on track to become the “AWS of fintech.” The company’s technology segment, which includes Galileo and Technisys, saw revenue growth of 46% year-over-year, making up nearly half of SoFi’s adjusted net revenue.
Moreover, SoFi Technologies, Inc. (NASDAQ:SOFI) commitment to AI and technology is evident in its introduction of AI-powered features like transactional fraud detection and enhancements to its payment platform. These innovations are crucial as the company expands its role in fintech and financial services. SoFi’s advancements position it well within the broader AI landscape, allowing the company to solidify its fintech dominance.
15. Affirm Holdings, Inc. (NASDAQ:AFRM)
Number of Hedge Fund Holders: 34
Affirm Holdings, Inc. (NASDAQ:AFRM) is a prominent fintech company providing innovative payment solutions across the U.S., Canada, and internationally. Its platform allows consumers to make point-of-sale purchases with flexible payment options, while offering merchant commerce solutions and a consumer-centric app. What classifies Affirm Holdings, Inc. (NASDAQ:AFRM) as a fintech leader is its ability to integrate cutting-edge financial technology that facilitates easier transactions and provides convenient financing options to consumers. Recently, the company’s focus on leveraging AI-driven advancements has placed it at the forefront of fintech firms riding the AI wave.
One of Affirm Holdings, Inc. (NASDAQ:AFRM) most notable AI-related developments is its partnership with Apple Wallet, which was launched in mid-September. This integration taps into Apple Pay’s high-income user base, aligning Affirm with wealthier, tech-savvy consumers. The strategic use of AI-driven payment technology, alongside Affirm Holdings, Inc. (NASDAQ:AFRM) robust underwriting capabilities, positions it to scale its operations more efficiently and personalize customer offerings. Morgan Stanley analysts upgraded Affirm’s rating from “underweight” to “equal-weight” and raised their price target to $37 from $20, citing the company’s AI-driven initiatives as a significant growth catalyst. The analysts believe that the company’s partnership with Apple could add $2 billion in incremental transaction volumes by FY26, substantially higher than prior estimates.
Affirm Holdings, Inc. (NASDAQ:AFRM) pivot towards attracting affluent customers is underpinned by its focus on providing 0% promotional financing and lower interest rates. These offerings, enabled by advanced AI algorithms that analyze consumer behavior and financial standing, allow the company to provide more competitive pricing. The shift towards appealing to high-income consumers is expected to result in higher engagement, furthering Affirm’s growth trajectory. Additionally, easing regulatory pressures in the Buy Now, Pay Later (BNPL) space provide Affirm with a clearer regulatory landscape, helping it focus on strategic initiatives.
In its recent earnings call, the company reiterated its technological focus, including AI advancements, to optimize both consumer experiences and merchant partnerships. As Affirm Holdings, Inc. (NASDAQ:AFRM) leverages AI for operational improvements and scaling, analysts project further upward revisions, especially with the next earnings report set for November, which could highlight additional progress.
14. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 35
StoneCo Ltd. (NASDAQ:STNE) is a prominent fintech company operating in Brazil, providing digital payment and software solutions to merchants across multiple channels, including in-store, online, and mobile. The company’s strong focus on small and medium-sized businesses (SMBs) positions it as a leader in enabling digital commerce in Brazil, using its proprietary Stone Hubs for localized services. StoneCo Ltd. (NASDAQ:STNE) also offers integrated solutions to e-commerce platforms, marketplaces, and software vendors, allowing it to thrive in the expanding fintech market.
StoneCo Ltd. (NASDAQ:STNE) faces some significant headwinds. Morgan Stanley recently downgraded the stock from “Equal-weight” to “Underweight,” citing concerns over slower growth and price compression in Brazil’s saturated payments market. The firm slashed StoneCo Ltd. (NASDAQ:STNE) price target from $16.50 to $7.00, warning of potential downside risks, as earnings projections for the next six years were cut by 45-55%. The primary concern is market saturation, coupled with expected price competition, which could erode operating margins and reduce payment volume growth. Analysts now believe 2024 will mark the peak for growth in the Brazilian payments industry.
However, StoneCo Ltd. (NASDAQ:STNE) Q2 2024 results provided some reasons for optimism. The company reported a 30% year-over-year increase in its client base and a 25% rise in total payment volume (TPV). Additionally, its banking division grew significantly, with a 62% increase in clients and a 65% rise in client deposits. StoneCo’s ongoing investments in sales, coupled with opportunities from Brazil’s PIX NFC and open banking initiatives, suggest it could continue expanding its fintech ecosystem.
While the downgrade raises concerns about long-term profitability, StoneCo Ltd. (NASDAQ:STNE) efforts to integrate AI and enhance its technological offerings position it to capitalize on future growth opportunities within the fintech sector.
Ave Maria World Equity Fund stated the following regarding StoneCo Ltd. (NASDAQ:STNE) in its fourth quarter 2023 investor letter:
“StoneCo Ltd. (NASDAQ:STNE) provides solutions that enable merchants and integrated partners to conduct electronic commerce seamlessly across in-store, online, and mobile channels in Brazil. StoneCo has faced near-term operational challenges because of the pandemic and high levels of inflation in Brazil. The company appears to be moving past these challenges and it appears that the successful integration of the newly acquired software business with its payments business will drive substantial shareholder value longer term.”
13. Payoneer Global Inc. (NASDAQ:PAYO)
Number of Hedge Fund Holders: 35
Payoneer Global Inc. (NASDAQ:PAYO), a prominent player in the fintech sector, operates a sophisticated payment infrastructure platform designed to meet the needs of businesses worldwide. Founded in 2005 and headquartered in New York, Payoneer provides a comprehensive suite of services, including cross-border payments, virtual and physical MasterCard offerings, working capital, and risk management solutions. The company’s platform is engineered for bank-grade security and stability, catering primarily to small and medium-sized businesses (SMBs) in approximately 190 countries. This expansive reach solidifies Payoneer Global Inc. (NASDAQ:PAYO) position as a key enabler of financial transactions in an increasingly globalized economy.
With the rise of AI, Payoneer Global Inc. (NASDAQ:PAYO) is strategically leveraging technology to enhance its service offerings and streamline operations. The recent earnings call highlighted several AI-related initiatives, including the introduction of automated features for real-time currency conversion and automated withdrawals at user-defined exchange rates. These innovations not only simplify financial management for cross-border SMBs but also position Payoneer Global Inc. (NASDAQ:PAYO) to capitalize on emerging trends within the fintech landscape.
Analysts are optimistic about Payoneer Global Inc. (NASDAQ:PAYO) future, as reflected in Needham’s recent report issued on October 7, which upgraded the stock’s price target from $9 to $10 while maintaining a “Buy” rating. This adjustment stems from positive discussions with CEO John Caplan and Investor Relations head Michelle Wang, reinforcing confidence in the company’s ability to deliver robust financial results. The firm’s upbeat outlook is underpinned by Payoneer’s strong market presence and its successful introduction of high take-rate products, which have driven revenue growth and improved average revenue per user.
During the earnings call, Caplan emphasized the company’s strong execution and expanding product suite, indicating that the average revenue per user has surged by 27% year-over-year. Volume growth reached an impressive 22%, particularly in the B2B sector, which saw a 40% increase. These metrics suggest a strong demand for Payoneer Global Inc. (NASDAQ:PAYO) services and an effective execution of its growth strategy.
Furthermore, Payoneer Global Inc. (NASDAQ:PAYO) is enhancing its technological capabilities through strategic acquisitions, such as Squad, which will enable it to offer automated hiring and payroll solutions for SMBs. This acquisition aligns with Payoneer’s goal to become a comprehensive financial partner for businesses navigating the complexities of global operations.
In summary, Payoneer Global Inc. (NASDAQ:PAYO) is well-positioned in the fintech space, leveraging AI-driven solutions and expanding its service offerings to address the unique needs of cross-border SMBs. With strong analyst support and a robust growth trajectory, Payoneer stands out as a compelling investment opportunity in the rapidly evolving fintech sector.
12. Marqeta, Inc. (NASDAQ:MQ)
Number of Hedge Fund Holders: 35
Marqeta, Inc. (NASDAQ:MQ) is a leading fintech company that operates a cloud-based open application programming interface (API) platform, offering card issuing and transaction processing services. The company’s solutions cater to various sectors, including financial services, e-commerce, and buy now, pay later (BNPL) systems. Marqeta is particularly innovative in fintech due to its use of artificial intelligence (AI) to enhance its transaction processing capabilities and deliver tailored solutions. Marqeta’s AI-driven platform is designed to help businesses manage payments efficiently, optimizing processing times and reducing operational overhead.
Marqeta, Inc. (NASDAQ:MQ) has caught the attention of analysts for its unique position in the payments industry. On September 9, 2024, Goldman Sachs maintained its Neutral rating on Marqeta with a price target of $6.00. The firm highlighted Marqeta’s potential for international expansion and its strong booking trends, noting these as positive signs for the company’s future growth. Analysts also pointed out the company’s growth trajectory outside its relationship with Block, Inc. (formerly known as Square), and emphasized its credit opportunities in consumer and commercial markets.
AI plays a significant role in Marqeta, Inc. (NASDAQ:MQ) operations. The company has developed AI-driven tools to personalize its offerings, making it more adaptive to the needs of its clients. Marqeta’s AI solutions are particularly effective in the BNPL space, where AI assists in credit issuance, transaction analysis, and customer behavior prediction. During its Q2 2024 earnings call, the company revealed plans to continue expanding its AI capabilities, especially in the commercial and financial services sectors, further enhancing its ability to process large volumes of transactions efficiently.
Marqeta, Inc. (NASDAQ:MQ) Q2 2024 earnings results were mixed. The company reported a 32% increase in total processing volume (TPV), reaching $71 billion, but also saw a 46% drop in net revenue due to changes in its Cash App contract. Despite these challenges, Marqeta continues to focus on innovation, including partnerships with Varo Bank and Zoho, and its certification by Visa for flexible credential support. This combination of AI innovation and strategic growth positions Marqeta, Inc. (NASDAQ:MQ) as a key player in the fintech sector.
11. Robinhood Markets, Inc. (NASDAQ:HOOD)
Number of Hedge Fund Holders: 38
Robinhood Markets, Inc. (NASDAQ:HOOD) operates a dynamic financial services platform that allows users in the United States to engage in various investment activities, including stocks, ETFs, options, and cryptocurrencies. Established in 2013 and headquartered in Menlo Park, California, Robinhood Markets, Inc. (NASDAQ:HOOD) has been at the forefront of the fintech revolution, enabling commission-free trading and fractional investments. The company’s integration of AI enhances user experiences through tailored educational resources and investment insights, positioning it as a leader in tech-driven finance.
On October 10, Bernstein SocGen maintained an “Outperform” rating for Robinhood Markets, Inc. (NASDAQ:HOOD), setting a price target of $30.00. This recommendation follows a notable 30% stock increase over the past month, with the stock doubling in value year-to-date. Analysts at Deutsche Bank and Piper Sandler have also revised their price targets to $27, acknowledging Robinhood’s strong potential in the cryptocurrency sector and its recovery from previous market challenges. Barclays upgraded its rating from “Underweight” to “Equalweight,” reflecting improved market conditions and profitability for the company.
In its recent earnings call, Robinhood Markets, Inc. (NASDAQ:HOOD) reported a remarkable 40% year-over-year revenue increase to $682 million, alongside record earnings per share of $0.21 for Q2 2024. Notably, net deposits reached a peak of $13 billion, showcasing a 41% annual growth rate. However, assets under custody saw a slight decline to $143.6 billion. CEO Vlad Tenev emphasized Robinhood’s commitment to capturing the active trader market and expanding internationally. The company’s strategic focus on enhancing product offerings, including the introduction of index options and futures trading, highlights its ambition to remain competitive.
Incorporating AI into its business strategy, Robinhood Markets, Inc. (NASDAQ:HOOD) acquired the AI company Pluto, which aims to accelerate the company’s advisory services. This acquisition signifies Robinhood’s dedication to harnessing advanced technologies to improve customer experience and expand its market presence. The ongoing development of AI-driven educational tools further supports its mission to empower users with financial knowledge.
In summary, Robinhood Markets, Inc. (NASDAQ:HOOD) blend of fintech innovation and AI integration positions it well for future growth. With positive analyst sentiment and strategic initiatives underway, Robinhood Markets, Inc. (NASDAQ:HOOD) is poised to capitalize on the evolving financial landscape, making it a compelling investment in the fintech sector.
10. BILL Holdings, Inc. (NYSE:BILL)
Number of Hedge Fund Holders: 45
BILL Holdings, Inc. (NYSE:BILL) is a leading provider of financial operations platforms tailored for small and midsize businesses (SMBs). The company’s offerings include a software-as-a-service (SaaS) solution that automates accounts payable and receivable transactions, streamlining connections between businesses and their suppliers or customers. By eliminating cumbersome expense reports, managing cash flow, and enhancing office efficiency, BILL Holdings, Inc. (NYSE:BILL) positions itself as a vital player in the fintech space.
Analysts are closely monitoring BILL Holdings, Inc. (NYSE:BILL) performance, with KeyBanc maintaining a Sector Weight rating on September 25, following the announcement of product enhancements. These upgrades include an expanded Invoice Financing offering and the new Local Transfer feature for same-day international payments, which bypasses the traditional SWIFT network to reduce costs. Deutsche Bank reiterated its Buy rating, citing a 16% year-over-year revenue growth, while Mizuho adjusted its price target downward due to a decline in the net revenue retention rate. Despite mixed analyst sentiments, the enhancements introduced are seen as positive indicators for BILL Holdings, Inc. (NYSE:BILL) future growth.
In its recent earnings call, CEO Rene Lacerte highlighted BILL Holdings, Inc. (NYSE:BILL) commitment to innovation and customer support, emphasizing how AI plays a pivotal role in enhancing the company’s platform. The company has made significant strides in developing an integrated platform that incorporates advanced analytics and AI capabilities, providing SMBs with comprehensive cash flow visibility and control. These features are particularly important as businesses navigate an uncertain economic landscape.
Fiscal 2024 was marked by substantial revenue growth, reaching $1.3 billion, up 22% year-over-year, alongside a 68% increase in non-GAAP operating income. The company’s proactive approach in utilizing AI to streamline operations and offer sophisticated financial tools has attracted a growing network of users, now totaling 7.1 million, a 21% increase from the previous year. With BILL Holdings, Inc. (NYSE:BILL) strategic initiatives, including partnerships with major financial institutions and a $300 million share buyback program, investors remain optimistic about the company’s ability to leverage AI to enhance its offerings and drive future growth in the fintech sector.
09. Ally Financial Inc. (NYSE:ALLY)
Number of Hedge Fund Holders: 45
Ally Financial Inc. (NYSE:ALLY), founded in 1919 and headquartered in Detroit, Michigan, operates as a digital financial services company that provides a wide range of products and services to consumers, commercial clients, and corporate customers, primarily in the United States and Canada. As a prominent player in the fintech sector, Ally Financial Inc. (NYSE:ALLY) leverages technology to streamline automotive finance, mortgage finance, insurance, and corporate finance operations. The company’s involvement with AI is particularly noteworthy, as it utilizes advanced analytics and data-driven insights to enhance customer experience and operational efficiency across its diverse service offerings.
Recent analyst ratings underscore Ally Financial Inc. (NYSE:ALLY) potential. On October 7, JPMorgan upgraded the stock from Neutral to Overweight, citing a favorable risk/reward profile despite a reduced price target of $40.00, down from $46.00. This upgrade reflects a reassessment of Ally’s market position, indicating that most credit and earnings challenges have already been factored into the current stock price. The analyst emphasized that the valuation presents an attractive entry point for investors, suggesting that upside potential outweighs the risks at this juncture.
In its Q2 2024 earnings report, Ally Financial Inc. (NYSE:ALLY) demonstrated resilience, reporting a 15% revenue increase and an adjusted EPS of $0.97, exceeding expectations of $0.64. However, the company faced challenges within its automotive retail sector, leading to the divestiture of its lending business to Synchrony Financial for $2.2 billion in loan receivables. During the earnings call, CEO Michael Rhodes highlighted the importance of technological investments, emphasizing Ally’s commitment to modernizing its platforms and enhancing data analytics capabilities. He noted that these advancements are essential for maintaining competitive advantages in the evolving fintech landscape.
Overall, Ally Financial Inc. (NYSE:ALLY) is well-positioned to leverage its extensive dealer network and robust technology investments to navigate industry challenges and capitalize on growth opportunities. Analysts from Bank of America and Citi have maintained positive ratings, projecting substantial growth in tangible book value, while RBC Capital reinstated coverage with an Outperform rating, underscoring manageable credit challenges. As the fintech sector continues to embrace AI innovations, Ally Financial Inc. (NYSE:ALLY) strategic focus on technology and customer-centric solutions will likely drive long-term shareholder value.
08. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 59
Block, Inc. (NYSE:SQ), formerly known as Square, Inc., is a prominent player in the fintech sector, providing an extensive range of commerce and financial services. The company operates through two key segments: Square and Cash App. The Square segment specializes in commerce solutions, offering products that support various business operations, including payment processing, point-of-sale systems, and banking services. Cash App, on the other hand, focuses on mobile financial tools, facilitating peer-to-peer payments, bitcoin transactions, and investment options. With its diverse offerings, Block, Inc. (NYSE:SQ) aims to create an integrated ecosystem that simplifies financial transactions for both businesses and individuals.
Recent developments include the launch of Square’s new Orders Platform, designed to streamline transactions for U.S. sellers. This platform introduces advanced features such as Pre-Auth and Bar Tabs, reflecting Block, Inc. (NYSE:SQ) commitment to leveraging technology to improve sales flexibility and operational efficiency. Saumil Mehta, Head of Product for Square, expressed optimism about the innovation opportunities this platform unlocks, suggesting that it will accelerate product development velocity and enhance customer satisfaction.
Block, Inc. (NYSE:SQ) utilizes artificial intelligence (AI) to enhance the seller experience, with features like Square Online’s themes and AI-generated product descriptions in Square for Retail helping sellers engage customers and automate sales. The company offers generative AI tools that streamline operations, speed up workflows, and save time. During Block, Inc. (NYSE:SQ) Q4 2023 earnings call, CEO Jack Dorsey emphasized the critical role AI plays in the company’s present and future strategies.
Dorsey highlighted AI’s importance, noting that while many earnings calls mention AI in relation to efficiency, for Block, Inc. (NYSE:SQ), it has a transformative impact. He stated, “AI is significantly improving our productivity by enhancing the tools we build and making our engineers more efficient.”
Looking ahead, Dorsey explained that AI will enable Block to innovate faster, correct errors swiftly, and maintain a creative edge. He remarked, “AI allows us to accelerate learning, speed up product launches, fix mistakes quickly, and stay ahead in the market by integrating complex systems creatively.”
Analysts have recently shown mixed sentiment towards Block, Inc. (NYSE:SQ). New Street Research initiated coverage on September 9 with a Neutral rating, emphasizing co-founder Jack Dorsey’s role in driving growth and addressing operational challenges, while stressing the importance of reversing market share losses and creating a balanced ecosystem for both Square and the Cash App. In contrast, BofA Securities maintained a Buy rating after a virtual investor meeting, which highlighted Block, Inc. (NYSE:SQ) renewed focus on enhancing the day-to-day operations of its Square business to boost Gross Payment Volume. Meanwhile, Mizuho Securities adjusted its outlook by lowering its price target to $94 but kept an Outperform rating, anticipating a 19% growth in Block, Inc. (NYSE:SQ) gross profit for 2024, slightly above the company’s guidance of 18%.
Block, Inc. (NYSE:SQ) Q2 2024 earnings report revealed impressive results, with earnings per share (EPS) of $0.93, surpassing expectations of $0.829. The company reported gross profit of $2.23 billion, reflecting a 20% year-over-year increase. Both segments demonstrated solid growth, particularly Cash App, which achieved a gross profit of $1.3 billion, up 23% year-over-year. The company’s commitment to enhancing its technology offerings, particularly through AI, is evident as it aims to bolster its ecosystem’s value.
Furthermore, Block, Inc. (NYSE:SQ) is raising its full-year 2024 guidance for gross profit and profitability, signaling strong momentum as it approaches the second half of the year. The company is focusing on initiatives that improve product velocity, with plans for further innovations in both Cash App and Square.
In summary, Block, Inc. (NYSE:SQ) stands at the forefront of the fintech sector, leveraging AI to enhance its offerings and operational efficiencies. The positive analyst ratings and strong financial performance underscore its potential for continued growth, making it a compelling option for investors looking to seek investment opportunities in fintech.
07. Fidelity National Information Services, Inc. (NYSE:FIS)
Number of Hedge Fund Holders: 59
Fidelity National Information Services, Inc. (NYSE:FIS) is a leading provider of financial technology solutions, catering to the needs of financial institutions, businesses, and developers worldwide. With operations segmented into Banking Solutions, Capital Market Solutions, and Corporate and Other segments, FIS offers an extensive range of services, including core processing, mobile and online banking, risk management, payment solutions, and wealth management.
Fidelity National Information Services, Inc. (NYSE:FIS) recent advancements in AI technology are noteworthy, particularly with the development of its Integrated Payables solution, which won the Best Business Payments Solution Award at the 2024 PayTech Awards USA. This solution employs automation and AI to streamline accounts payable processes, enhancing payment visibility and improving remittance detail. FIS Group President of Automated Finance, Seamus Smith, was also recognized for his leadership in steering the company towards next-generation solutions that significantly impact the $1.1 trillion business-to-business payments market.
Analysts have expressed optimism regarding Fidelity National Information Services, Inc. (NYSE:FIS) trajectory. On October 8, 2024, Barclays analyst Ramsey El-Assal raised the firm’s price target for FIS from $90 to $98 while maintaining an Overweight rating. This upward revision underscores the firm’s confidence in Fidelity National Information Services, Inc. (NYSE:FIS) growth potential, particularly following its operational restructuring and strategic focus on high-margin technology sales.
Heartland Mid Cap Value Fund stated the following regarding Fidelity National Information Services, Inc. (NYSE:FIS) in its Q2 2024 investor letter:
“Financials. In the second quarter, we started a new position in Fidelity National Information Services, Inc. (NYSE:FIS). FIS is one of three major suppliers of core processing software and services utilized by banks, capital market participants, and corporations. Whenever you log into your mobile phone banking app, pay a bill, or transfer money, there is a decent chance that FIS enables that transaction. Given the contractual nature of its business, 80% of the company’s revenues are recurring providing better revenue visibility and less profit volatility than sector peers.
FIS is a classic self-help story about strategic course correction and capital allocation. The company’s prior management team took a wrong turn by following competitor Fiserv into the merchant acquiring industry — the intermediaries that stand between credit card networks like Visa or Mastercard and card issuers like Capital One or Citi — when it overpaid for Worldpay in 2019. Rather than boosting FIS’s growth as planned, the acquisition was a distraction as software startups began taking share from incumbents, including Worldpay…” (Click here to read the full text)
06. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a prominent player in the fintech sector, specializing in payment technology and software solutions across card, check, and digital payments in the Americas, Europe, and Asia-Pacific. The company operates through two primary segments: Merchant Solutions and Issuer Solutions. Merchant Solutions focuses on payment processing, authorization, customer support, and integrated software that enhances operational efficiency for businesses. The Issuer Solutions segment caters to financial institutions and retailers, helping them manage card portfolios and streamline payment processes.
As part of its growth strategy, Global Payments Inc. (NYSE:GPN) has been increasingly integrating AI into its offerings. AI technologies are enhancing their capabilities in areas such as fraud detection, customer insights, and operational efficiencies, positioning the company favorably in a competitive market. During the recent earnings call, CEO Cameron Bready highlighted the accelerated demand for embedded payments and commerce solutions, driven by AI advancements and customer preferences for seamless digital transactions.
On October 7, 2024, Barclays reaffirmed its “Overweight” rating for Global Payments with a price target of $120.00, despite concerns surrounding projected slowdowns in the Merchant Solutions segment for fiscal 2025. Barclays analysts emphasized that the anticipated mid-single-digit growth in adjusted net revenue for this segment should not cause alarm, as the company is strategically repositioning to re-accelerate growth. They indicated that sub-segments, including Point of Sale (POS) and Integrated & Embedded solutions, are expected to grow at a mid-single-digit-plus rate, driven by robust market demand.
Other analysts have expressed mixed sentiments. RBC Capital has maintained an “Outperform” rating while adjusting its price target to $143, while Mizuho Securities and KeyBanc have trimmed their targets to $100 and $135, respectively, reflecting cautious outlooks for 2025. Seaport Global Securities downgraded Global Payments from Buy to Neutral due to growth concerns.
Global Payments Inc. (NYSE:GPN) strategic initiatives, including the launch of its next-generation POS software and expansion into international markets like Germany, signal its commitment to harnessing AI and technology for growth. The company’s plans to return $7.5 billion to shareholders over the next three years underscore its confidence in sustained revenue and earnings growth through 2027. With its focus on leveraging AI for enhanced customer experiences and operational efficiencies, Global Payments Inc. (NYSE:GPN) is well-positioned to capitalize on the evolving fintech landscape.
05. Fiserv, Inc. (NYSE:FI)
Number of Hedge Fund Holders: 73
Fiserv, Inc. (NYSE:FI) is a prominent player in the fintech sector, providing a comprehensive suite of payments and financial services technology across various global markets, including the United States, Europe, the Middle East, and Africa. Fiserv, Inc. (NYSE:FI) innovation in financial technology is exemplified by its robust offerings like Clover, a cloud-based point-of-sale system, and its integrated operating system, Carat. The increasing integration of AI within its services is a critical aspect of its growth strategy, enhancing transaction efficiency and fraud protection.
On October 10, Barclays raised Fiserv’s price target to $215 from $185, maintaining an Overweight rating on the stock. This positive outlook reflects Fiserv’s strong earnings performance and growth potential within the fintech landscape. The company reported a second-quarter adjusted earnings per share of $2.13, surpassing expectations of $2.11, driven by a solid 7% growth in adjusted revenue and an impressive 18% organic revenue growth.
During the recent earnings call, CEO Frank Bisignano emphasized the company’s commitment to technological innovation, particularly highlighting how Fiserv is integrating AI and digital solutions into its service offerings. Notably, Fiserv, Inc. (NYSE:FI) is enhancing consumer payment experiences through partnerships with major firms like Apple, enabling features such as installment loans at checkout. This integration aims to drive card conversion and consumer spending, positioning Fiserv, Inc. (NYSE:FI) as a competitive force in the evolving payments landscape.
With strong free cash flow of $1 billion for the quarter and a focus on strategic growth initiatives, Fiserv, Inc. (NYSE:FI) demonstrates resilience and adaptability in a rapidly changing financial environment. Analysts see a bright future for the company as it leverages technology to maintain its competitive edge and expand its market share, solidifying its status as a fintech leader.
Broyhill Asset Management stated the following regarding Fiserv, Inc. (NYSE:FI) in its Q2 2024 investor letter:
Fiserv, Inc. (NYSE:FI) is the premier provider of financial technology services, supporting banks, credit unions, and financial institutions with innovative banking solutions, payment processing, and data analytics to streamline and secure financial transactions. The company’s shares slid 7% during the quarter before rallying 10% in July to fresh all-time highs. Clover remains the company’s crown jewel, generating over $300 billion in annualized GPV (Gross Payment Volume) with better monetization, driving 28% revenue growth in the recently reported quarter, and three new hardware products plus pilot programs in Mexico and Brazil going live in the coming months. Simply put, there are few businesses in this industry executing even close to the same level, and fewer still with Fiserv’s scale, distribution, and collection of assets. In our initial write-up, we highlighted the embedded distribution advantages often enjoyed by incumbents, noting that “Fiserv can cross-sell products through its large, engrained distribution channels, driving faster growth than even its most rapidly growing peers. And with Clover and Square accounting for less than 10% of a fragmented market, we think there is plenty of room for both to run.” Notably, Jack Dorsey, Chief Block Head, Square Head, Chairman, and Cofounder, recently came to the same conclusion, admitting as much on the company’s most recent earnings call: “I would state that our product quality is far above the majority of our competitors. Where we have been weaker in the past is how we mirror that with our go-to-market strategy and just updating our approach there, especially given what our competitors have done.“ We wonder which competitors come to mind.
04. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 82
Intuit Inc. (NASDAQ:INTU) is a prominent player in the financial software industry, known for its innovative products that cater to consumers, small businesses, and mid-market enterprises. The company is recognized as a fintech leader due to its comprehensive suite of solutions, including TurboTax, QuickBooks, and Credit Karma, which facilitate various financial transactions and tax-related activities. Intuit Inc. (NASDAQ:INTU) significant involvement in AI is transforming how it delivers services, with a focus on enhancing user experiences through its AI-driven platform.
On September 30, 2024, BMO Capital Markets reaffirmed its positive outlook on Intuit, maintaining an Outperform rating with a price target of $760. This confidence followed an analyst day where the company presented its growth strategies and robust plans for expanding its offerings, particularly within the QuickBooks ecosystem. BMO highlighted Intuit’s ambitious growth strategy, which combines proactive initiatives with necessary adjustments to meet the evolving needs of its customers, reinforcing its resilience in a challenging macroeconomic environment.
During the latest earnings call, Intuit reported strong performance, exceeding earnings expectations with an EPS of $1.99 against forecasts of $1.85. The company is capitalizing on its AI capabilities, which include knowledge engineering and machine learning, to deliver enhanced customer experiences. Intuit Inc. (NASDAQ:INTU) AI-powered assistant, Intuit Assist, is a cornerstone of its strategy, providing users with a seamless interface to navigate their financial needs. This initiative is expected to accelerate adoption and deepen penetration in traditionally high-touch services, thereby driving growth.
Intuit’s commitment to AI is evident in its “Big Bets” strategy, focusing on delivering done-for-you experiences and enhancing service delivery acros its platforms. The company’s initiatives to digitize payment processes and provide comprehensive financial solutions are expected to solidify its position in the fintech space, particularly as it continues to innovate and adapt to market demands.
In conclusion, Intuit Inc. (NASDAQ:INTU) blend of strong fundamentals, strategic AI investments, and a clear path for growth positions it as a leader in the fintech sector, making it a compelling choice for investors looking to capitalize on the AI wave reshaping financial services.
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.
02. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 142
Mastercard Incorporated (NYSE:MA) is a global leader in transaction processing and digital payment solutions, making it a key player in the fintech sector. The company provides a wide range of payment-related products and services, including credit, debit, and prepaid solutions, serving both consumers and businesses across the world. Its involvement in the fintech space is underscored by its commitment to enhancing digital payment systems through partnerships, acquisitions, and innovative technologies, particularly in the realm of AI.
Mastercard Incorporated (NYSE:MA) has integrated AI into several facets of its operations, which is propelling the company into the next phase of fintech innovation. During its Q2 2024 earnings call, Mastercard highlighted how AI plays a critical role in enhancing fraud detection, cybersecurity, and data analytics. By embedding AI into its services, Mastercard has been able to provide more secure and efficient transaction solutions. This AI integration extends to Mastercard’s strategic focus on value-added services, such as fraud detection tools, which are increasingly in demand as digital transactions grow globally.
On October 8, 2024, Citi updated its price target for Mastercard Incorporated (NYSE:MA) shares, raising it to $566 from the previous $538, while maintaining a Buy rating. This revision reflects Mastercard’s robust fundamentals, including its strategic acquisitions and partnerships. Citi analysts noted the inclusion of AI-driven services as a critical growth driver, though the acquisition of Recorded Future, a threat intelligence company, has not yet been factored into revenue estimates. Citi’s projections also took into account currency fluctuations and recent debt issuance, though there was only a slight moderation in earnings per share estimates for the coming years.
Mastercard Incorporated (NYSE:MA) continued expansion into emerging markets, particularly through partnerships with companies like Amazon in the Middle East and Africa, and Safaricom in Kenya, showcases its drive to extend digital payment solutions globally. AI plays a pivotal role in these endeavors, enabling the company to streamline payment processing and cross-border transactions, further solidifying Mastercard Incorporated (NYSE:MA) position as a fintech leader.
01. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V), a global leader in payment technology, operates VisaNet, a comprehensive transaction processing network that handles authorization, clearing, and settlement of payment transactions. Known for its broad portfolio of credit, debit, and prepaid card solutions, Visa is a key player in the fintech industry, offering innovative services such as Visa Direct and Visa B2B Connect for cross-border payments. The company’s involvement in AI and blockchain technology is driving its growth in the fintech space, helping streamline payment processes and enhance security through fraud prevention solutions.
One of Visa Inc. (NYSE:V) latest innovations is the Visa Tokenized Asset Platform (VTAP), launched in October 2024. This blockchain-based platform allows financial institutions to issue fiat-backed tokens on blockchain networks. Visa is targeting the growing intersection of blockchain and traditional banking with VTAP, enabling banks to mint, burn, and transfer tokenized fiat currencies like stablecoins. Through VTAP, Visa aims to integrate blockchain technology into existing financial infrastructures with minimal technical integration via APIs. The company plans to launch live pilots of the platform in 2025, starting with BBVA on the Ethereum blockchain.
AI plays a crucial role in Visa Inc. (NYSE:V) growth strategy, particularly in fraud prevention. Visa recently announced its acquisition of Featurespace, a leading AI-driven firm specializing in fraud detection. This move is expected to further enhance Visa’s capabilities in identifying and mitigating financial fraud, strengthening its position as a secure and reliable payments provider in the fintech space.
Despite some regulatory challenges, including a Department of Justice (DOJ) lawsuit alleging anti-competitive practices in its U.S. debit business, Visa has maintained strong financial performance. On October 3, 2024, BMO Capital reiterated its Outperform rating for Visa, with a price target of $300. Analysts believe the long-term impact of the DOJ lawsuit will be limited, and Visa Inc. (NYSE:V) continued investments in AI and blockchain technologies position it for future growth.
Additionally, Visa Inc. (NYSE:V) strategic financial decisions, such as a $1.5 billion allocation to its litigation escrow account, have resulted in the repurchase of 5.5 million shares, reflecting strong shareholder returns. With its focus on AI, blockchain, and financial innovation, Visa Inc. (NYSE:V) remains a dominant fintech player.
While we acknowledge the potential of VISA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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