Fintech and other technological trends have taken a backseat to generative artificial intelligence (AI) over the past year or so. With various cryptocurrencies heating up again, though, financial technologies’ long-term potential (like those on the blockchain) will be harder to ignore. Add a sprinkle of generative AI into the equation, and the leading financial technology firms — think V, MA, and NU — may be next to join the bullish ascent as growth-hungry investors look for lower-cost firms that can profit from AI.
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Therefore, let’s check TipRanks’ Comparison Tool to gain a better gauge of the following Strong-Buy-rated fintech firms and the road ahead for an industry that stands to benefit greatly from AI’s next chapter.
Visa (NYSE:V)
Visa stock broke out in a big way in the fourth and final quarter of last year. So far, in 2024, the credit card king is showing no signs of slowing down, with 8% returns posted year-to-date. Though some may view Visa as an old-fashioned credit card firm, I’m more inclined to view it as a digital payments innovator.
Sure, Visa may not be as cutting-edge as some of its smaller peers, given its massive size and impressive credit card leadership position, which has naturally forced the firm to play defense. Regardless, Visa stock seems to be in a sweet spot for the GARP (growth at a reasonable price) investors out there. For that reason, I remain bullish as Visa continues to embrace payment tech with open arms.
Indeed, as we’re propelled further into the AI age, Visa and other payment firms need to be vigilant, as it’s not only good-meaning entities that stand to benefit from generative AI. Cyber threats and various fraudsters can also harness the power of AI. As such, all big firms need to take a more proactive approach to protecting users from fraud.
Visa has been leveraging AI to detect fraud and manage risks for many decades before AI was a buzzword on Wall Street. As predictive AI becomes more capable, count on Visa to stay on the cutting edge as it seeks to stay many steps ahead of fraudulent actors.
Apart from fighting fraud with AI, look for Visa to keep putting cash toward its Generative AI Ventures fund. Yes, the credit card company has an AI fund, just like the mega-cap tech titans. This goes to show just how much skin in the game the firm has as it looks to defend its dominance in payments and fintech. At 29.1 times forward price-to-earnings, V stock is a fintech firm to continue watching closely.
What Is the Price Target of V Stock?
Visa stock is a Strong Buy, according to analysts, with 22 Buys and one Hold assigned in the past three months. The average V stock price target of $306.64 implies 9.9% upside potential.
Mastercard (NYSE:MA)
Speaking of fighting fraud with AI, Mastercard is also a major player on the scene. Arguably, Mastercard has even more to gain from investing heavily in AI as it seeks to chase down the heavyweight champ Visa. Mastercard’s chief technology officer, Ed McLaughlin, recently sat down with Fortune in a chat centered around the company’s involvement with next-generation technologies, like AI.
“The way the [AI] systems are working is always making predictions of what’s most likely to happen,” said McLaughlin. “And that’s why these generative [AI] techniques are so exciting, as they’re allowing us to make better predictions.”
Undoubtedly, Mastercard seems to be doing its best to stay ahead, perhaps far ahead, of bad actors who seek to use AI for evil. This alone is enough to make anyone bullish. As the company continues to perfect predictive AI, I expect it could prevent a swelling figure of fraud losses. Undoubtedly, AI-driven fraud management is a big deal when it comes to saving money in the never-ending battle against fraud.
At this juncture, I don’t think you could go wrong with Visa or Mastercard when it comes to AI-driven payment innovation. As it stands, however, I’m a bigger fan of MA stock, even at the pricier 32.2 times forward price-to-earnings multiple. The number-two credit card behemoth has room to catch up to Visa as it looks to aggressively invest in AI to go on the offensive.
What Is the Price Target of MA Stock?
Mastercard stock is a Strong Buy, according to analysts, with 29 Buys and one Hold assigned in the past three months. The average MA stock price target of $512.48 implies 9.4% upside potential.
Nu Holdings (NASDAQ:NU)
Nu Holdings is a relative lightweight compared to Visa and Mastercard, with its mere $53.6 billion market cap. The Brazil-based digital bank has enjoyed exceptional growth as it expanded its financial services (think no-fee credit and debit cards) into emerging nations. I’ll admit, it was the bold investment made by Berkshire Hathaway (NYSE:BRK.B) a few years ago that put NU stock on my radar.
Though shares of NU represent a small portion of the Berkshire portfolio (around 0.3% as of the latest quarter), there’s no denying that Nu Holdings has many traits of a “wonderful” business.
And even though shares are scorching hot again, I can’t help but stay bullish on the company’s plans to bring new payment technologies to high-growth Latin American markets. High-growth technology meets high-growth emerging markets? That sounds like a formula for sustainably high growth rates to me.
In the latest fourth quarter, NU clocked in $2.4 billion in sales, up just north of 12% year-over-year. That’s not bad, given recent macro headwinds. The bigger headline, though, was that CEO David Velez noted Nu is “investing heavily in new growth avenues” to drive profit.
With sights set on “the 100 million customers milestone in 2024,” I find it hard to give up on the fintech darling. At 25.3 times forward price-to-earnings, NU stock seems like an even better bargain than Visa or Mastercard, as it aims to bring banking services to the masses.
What Is the Price Target of NU Stock?
NU stock is a Strong Buy, according to analysts, with three unanimous Buys assigned in the past three months. Nonetheless, the average NU stock price target of $11.33 implies 1.05% downside potential.
Conclusion
The fintech scene is full of GARP-like plays these days as they seek to harness AI tech to bolster their moats. Of the trio, analysts see the most year-ahead upside from V stock, and that makes sense. Visa is the biggest and perhaps best value of the batch right now. The company’s tech savviness still seems discounted by many.
