PayPal vs. Upstart: Which Fintech Stock is the Better Buy Now?

The fintech sector is buzzing with unprecedented energy, as companies like PayPal PYPL and Upstart Holdings UPST drive breakthroughs in digital payments and AI-driven lending. For investors eyeing exposure to top fintech stocks, both names offer compelling stories, though they thrive in distinctly separate domains.PayPal, a veteran in online payments, continues to expand its ecosystem through Venmo’s expansion, strategic partnerships and new payment features. On the other hand, Upstart draws investors' interest with its AI-powered lending platform, delivering strong revenue growth while expanding into auto and home financing. Yet, both face hurdles, intense competition and foreign exchange fluctuations for PayPal, and credit sensitivity and volatility for Upstart.Let’s examine PayPal’s growth, Upstart’s AI lending innovations and other factors to find out which fintech stock deserves a spot in your portfolio.The Case for PayPalPayPal is executing on four growth pillars: winning checkout, scaling omni and growing Venmo, driving payment services profitability, and scaling its next-gen growth vectors. PayPal posted strong third-quarter results, boosting revenues 7.3% year over year to $8.42 billion. Total Payment Volume (TPV) increased 8.4%, while Transaction margin dollars (TM$), excluding interest on customer balances, grew 7.1%, highlighting the strength of its core payments business.Venmo stands out as a major growth driver, serving as the top choice for money transfers among young, affluent and tech-savvy users. Venmo launched Venmo Stash, an innovative rewards program that is designed to give customers more value that grows with every interaction. Venmo also joined hands with Bilt to expand how people use Venmo for everyday payments. In the third quarter of 2025, Venmo revenues surged more than 20% year-over-year, with Venmo Debit Card monthly active account growth of more than 40% and Pay with Venmo TPV soaring approximately 40%. Venmo remains poised to deliver $1.7 billion in 2025 revenues, excluding interest income. This reflects more than 20% growth and a 10-point acceleration from two years ago.PayPal is investing in AI-driven e-commerce through “agentic commerce,” wherein AI agents help consumers to discover, compare and buy products. This month, the company teamed up with Microsoft to power the launch of Copilot Checkout in Copilot. This lets shoppers discover, decide and pay entirely within the Copilot interface. The company is also partnering with AI platforms, such as OpenAI, Perplexity and Google Cloud. Beyond these efforts, PayPal recently announced a new partnership with april to allow U.S. PayPal Debit Mastercard customers to file their 2025 federal and state tax returns for free using april's DIY tax filing service.PayPal has invested in other initiatives that drive its growth. The company announced that it has filed applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to establish PayPal Bank, a proposed Utah-chartered industrial loan company. PayPal rolled out “PayPal links,” wherein users are able to send and receive money easily through a personalized, one-time link that can be shared in any chat or conversation. In other news, PayPal launched PayPal “Pay in 4,” a no-fee, buy now, pay later solution for Canadians. It also introduced PayPal World for seamless global wallet interoperability. These initiatives strengthen its relevance in both e-commerce and offline retail while laying the groundwork for new revenue streams.PayPal still faces challenges. PayPal operates in a highly competitive global payments industry, and its nature of business makes it vulnerable to foreign exchange fluctuations. In the third quarter of 2025, payment transactions fell 4.5%. Engagement per user also slipped, with payment transactions per active account on a trailing 12-month basis declining 6.2% year over year. Still, excluding low-margin processing, engagement improved.The Case for UpstartUpstart is a leading artificial intelligence (AI) lending marketplace that connects consumers to more than 100 banks and credit unions via AI models for underwriting. The company makes money through platform/referral fees from its lending partners, loan servicing charges, and proceeds from selling loans or securitizing them. In the third quarter of 2025, the company saw revenues surge 71% year over year, with loan originations rising even faster at 80%.Upstart has expanded beyond its core personal loan business into areas like auto lending, home equity lines of credit (HELOCs) and small-dollar loans. While these emerging segments are still smaller than personal loans, they're expanding quickly. In the third quarter of 2025, these newer businesses made up almost 12% of total originations and 22% of new borrowers on the Upstart platform, underscoring diversification as a key driver of Upstart's future growth.Upstart enables lending partners to originate credit through its AI lending marketplace. MyPoint Credit Union has teamed up with Upstart to deliver personal loans to more consumers. Tech CU has likewise chosen Upstart to provide personal loans and auto refinance loans to more consumers. The company has also collaborated with Peak Credit Union to offer personal loans on its platform, and Corporate America Family Credit Union leverages it for personal loans, auto refinancing and HELOCs. As of Sept. 30, 2025, Upstart had more than 100 lending partners participating on its marketplace, and the company expects to continue to expand its lending partnerships to new participants.In the third quarter of 2025, Upstart's AI automation handled 91% of loans with zero human involvement, enhancing scalability for quicker approvals at lower rates. The company also rolled out a new machine learning model to fine-tune take rates. Over time, this framework will unlock significant improvements in its ability to monetize model wins that deliver real value to borrowers.Despite exposure to credit-sensitive borrowers and volatility in AI-driven models, Upstart’s leading AI lending marketplace, diversified products and strategic partnerships make it a reliable choice for investors seeking fintech stocks with strong growth prospects. Also, management pointed to calibration upgrades initiated in the third quarter of 2025 to reduce month-to-month conversion volatility by about 50%.How Do Estimates Compare for PayPal and Upstart?The Zacks Consensus Estimate for PayPal’s 2025 sales and EPS implies year-over-year growth of 4.5% and 14.6%, respectively. EPS estimates for 2025 have been southbound over the past week.For PayPal: Image Source: Zacks Investment Research The Zacks Consensus Estimate for Upstart’s 2025 sales implies year-over-year growth of 62.8%, while the 2025 EPS indicates significant growth. What is also encouraging is that EPS estimates for 2025 have been trending northward over the past 90 days.For Upstart: Image Source: Zacks Investment Research Price Performance: PYPL vs. UPSTOver the past month, both PYPL and UPST shares have decreased 8% and 8.5%, respectively, underperforming the S&P 500 composite. Image Source: Zacks Investment Research Valuation: PYPL vs. UPSTIn terms of forward 12-month Price/Sales (P/S), PYPL stock is trading at 1.47X, below its three-year median of 2.10X, while Upstart is currently trading at 3.57X, which is also below its three-year median of 4.09X. Image Source: Zacks Investment Research ConclusionBoth PayPal and Upstart are notable players in the fintech landscape, yet they represent very different kinds of opportunities. PayPal benefits from its large scale, strong user engagement through Venmo, broad product suite and strategic partnerships. However, it faces fierce competition and its business impacts from foreign exchange fluctuations.In contrast, Upstart’s AI-driven lending platform is innovative and growing rapidly, yet its heavy exposure to credit-sensitive borrowers and volatility in AI-driven models remains a concern. Upstart is smartly expanding into new credit categories via enhanced AI and better funding structures.Backed by solid revenue growth, partnerships and AI automation, Upstart stands out as the fintech offering greater near-term upside potential for long-term investors seeking innovation-driven growth.Currently, UPST has a Zacks Rank #3 (Hold), while PYPL carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report Upstart Holdings, Inc. (UPST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks