Many tech firms are hungry for a piece of the fast-growing payments market. It’s not just fintech pure-plays like PayPal (NASDAQ:PYPL) that can capture a big chunk of the industry. Even big-tech darlings like Amazon (NASDAQ:AMZN), want in on the action. Despite the increasing competition, though, Amazon, Visa (NYSE:V), and Mastercard (NYSE:MA) have Strong Buy consensus ratings from analysts as well as Outperform Smart Scores, implying that these stocks can outperform the market from here.
Therefore, let’s compare the stocks using TipRanks’ comparison tool to see which firm looks most promising.
Amazon is the master at using innovation to disrupt its target markets. With a customer-centric approach and its unique ability to win “price races to the bottom,” it’s almost a given that Amazon will upend any new market it aims to expand into. Just look at what Amazon has done to the old-school brick-and-mortar retailers that failed to adapt over the past decade!
Now that the e-commerce behemoth has its sights set on digital (and physical) payments, it may be in a spot to squeeze some of the lightweight fintech firms (like the Buy Now Pay Later firms) until they’re on their knees.
Though payments are a relatively small slice of Amazon’s revenue pie, look for financial services to grow considerably over the next decade. All things considered, I remain bullish as the company keeps on disrupting any markets where it sees profit potential.
When it comes to disruptive potential, the “Buy with Prime” service looks like it could profoundly disrupt fulfillment and payments in one go.
With the “Buy with Prime” subscription offering, Amazon combines free shipping from an Amazon warehouse with payment processing, among other services, a win for the merchant and an even bigger win for Prime customers.
For existing Prime users, the “Buy with Prime” button makes it all too easy to complete a checkout seamlessly while getting fast (and free) shipping, likely a heck of a lot faster (and cheaper) than what a merchant could provide without Amazon’s assistance. And for merchants, including the button on one’s site is a no-brainer.
Conversion rates are likelier to be much higher among Amazon’s many Prime users, and, of course, I’m sure merchants would be delighted to delegate fulfillment and payment services at the lowest price point possible. That means fewer abandoned carts and more time to focus on actually running one’s business.
I view “Buy with Prime” as a potentially massive boon to Amazon’s payments business as the company expands its footprint beyond its own digital storefront.
At writing, Amazon sports a Smart Score of 9 out of 10, which is pretty stellar for a $1.4 trillion company that still has disruptive innovation in its veins.
What is the Price Target for AMZN Stock?
Amazon stock is a Strong Buy, with 39 Buys and one Hold rating assigned in the past three months. The average AMZN stock price target sits at $175.63, implying 29.5% upside potential.
Visa is a credit card company that effectively has the throne in the world of payments. Could it lose the throne if it fails to innovate in the artificial intelligence (AI) age? Most definitely. However, the company certainly stands out as more of a tech company than an old-school firm, with all the intriguing innovations going on behind the scenes. Reportedly, Visa is taking AI very seriously as it looks to enhance its competitive positioning.
Though Visa is a payment king, I see no reason to believe the firm is about to relinquish the throne anytime soon, especially as it bets big on AI tech. For this reason, I am staying bullish as shares look to break out to new highs.
Reportedly, Visa is licensing generative AI (like ChatGPT-4) to help give all aspects of its business a jolt. Indeed, it’s hard to believe that such a long-time company has over 300 AI models that can improve in key areas such as cybersecurity.
The way I see it, Visa is protecting its moat (and fat margins) with generative AI. Moreover, the firm could be in a spot to grow further, given the scale of the digital payments scene.
For now, the stock looks cheap at 30.9 times trailing price-to-earnings (P/E), well below its five-year historical average of 35.5 times. With a ‘Perfect 10’ Smart Score, Visa stock is nothing short of compelling right here.
What is the Price Target for V Stock?
Visa stock is also a Strong Buy, with 19 Buys and two Holds assigned in the past three months. The average V stock price target of $284.62 implies 17.6% upside potential.
Mastercard is another credit card firm that ought to be viewed more like a financial technology company. Despite recent headwinds, Mastercard actually managed to squeeze out a margin improvement in its latest quarter, with its adjusted operating margin rising from 57.9% to 58.6%. Undoubtedly, it’s not hard to imagine that firms are salivating over the potential margins to be had in the realm of payments.
As the company embraces everything from blockchain technology to generative AI, I’m inclined to stay bullish on the name. However, I do acknowledge shares are much pricier than those of Visa, with the stock trading at 38.7 times earnings currently.
Like Visa, Mastercard views AI as a secret weapon to enhance cybersecurity and combat fraud in real time. As the company continues flexing its tech savviness, I think it will be tough to stop Mastercard’s growth once macro headwinds finally pass. Finally, Mastercard stock sports a solid Smart Score of 9 out of 10, suggesting that it can outperform the market.
What is the Price Target for MA Stock?
Mastercard’s a Strong Buy on TipRanks, with 18 Buys and one Hold rating assigned by analysts in the past three months. The average MA stock price target of $466.18 entails a 13.5% gain from here.
Wall Street views these tech-savvy payment-related plays favorably. Of the three presented in this piece, analysts expect the most upside (~29.5%) from Amazon stock, although all three stocks have Outperform ratings and solid upside potential.