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

Core Insights - The fintech sector is experiencing significant growth, with companies like PayPal and Upstart leading in digital payments and AI-driven lending respectively [2][3] PayPal Overview - PayPal is focusing on four growth pillars: enhancing checkout experiences, scaling its omni-channel presence, increasing profitability in payment services, and developing next-generation growth vectors [5] - In Q3 2025, PayPal reported a revenue increase of 7.3% year-over-year to $8.42 billion, with Total Payment Volume (TPV) rising by 8.4% [5] - Venmo is a key growth driver, with Q3 2025 revenues increasing over 20% year-over-year and a projected $1.7 billion in revenues for 2025 [6] - PayPal is investing in AI-driven e-commerce through partnerships with Microsoft and other AI platforms, enhancing its service offerings [7][8] - Despite its growth, PayPal faces challenges from intense competition and foreign exchange fluctuations [9] Upstart Overview - Upstart operates as an AI lending marketplace, connecting consumers with over 100 banks and credit unions, and reported a 71% revenue growth in Q3 2025 [11] - The company has diversified its offerings beyond personal loans into auto lending and home equity lines of credit, with these segments accounting for 12% of total originations [12] - Upstart's AI automation processed 91% of loans without human involvement, improving scalability and efficiency [14] - The company is expanding its lending partnerships and enhancing its AI models to reduce volatility in loan conversions [15] Financial Estimates - The Zacks Consensus Estimate for PayPal's 2025 sales implies a growth of 4.5%, while Upstart's sales are expected to grow by 62.8% [16][19] - PayPal's current forward Price/Sales ratio is 1.47X, below its three-year median of 2.10X, while Upstart's is 3.57X, also below its three-year median of 4.09X [22] Conclusion - PayPal benefits from its scale, user engagement, and product diversity but faces competitive pressures and currency risks [23] - Upstart's innovative AI-driven platform shows strong growth potential, although it is exposed to credit-sensitive borrowers [25]