Block XYZ shares have gained 26.6% year to date, which can be attributed to the combined strength of its Square merchant ecosystem and Cash App consumer platform. The rally also reflects the strength of its AI implementations, which have improved customer engagement, as well as strategic partnerships that have expanded distribution opportunities.
XYZ stock has not only outperformed its peers, such as Affirm AFRM and StoneCo Ltd. STNE, but has also outperformed the S&P 500 composite over the same time frame. Year to date, Affirm shares have gained 9.6%, while StoneCo shares have declined 24%.
However, the question remains whether Block’s fundamentals are sufficient to gain momentum now, or a challenging macroeconomic environment could jeopardize its growth tempo. Here, we analyze XYZ in detail to determine whether it will be prudent enough to buy the stock for now, hold or fold.
Image Source: Zacks Investment Research
What’s Supporting Block’s Progress?
Cash App has been a key contributor to Block’s momentum, evolving well beyond its origins as a peer-to-peer payments platform. It now operates as a comprehensive financial platform, particularly for younger, digitally native consumers. By offering services across payments, banking, commerce and bitcoin transactions, Cash App continues to deepen its role in users’ everyday financial activities.
Growth in Primary Banking Actives also remained strong, supporting continued momentum for the Cash App Card in the first quarter. In March 2026, Cash App Primary Banking Actives increased 18% year over year to 9.7 million, reflecting sustained gains in user engagement. While the company expects a slight seasonal sequential decline in the second quarter compared with the first, it still anticipates continued year-over-year growth in Primary Banking Actives.
In early June, Block announced the launch of Afterpay on Cash App Card, making Buy Now, Pay Later (“BNPL”) available to eligible Cash App Card customers. The feature targets American earners with variable incomes and customers who are underserved by the current financial system. It is being rolled out to Cash App’s roughly 59 million monthly transacting active users. Block stands to benefit from increased card usage and merchant volume while capturing BNPL fees.
Square, Block’s merchant business, continues to perform well, posting double-digit gross payment volume (GPV) growth in first-quarter 2026. Innovations like the next generation of Square Register also highlight the company’s efforts to keep Square competitive in the evolving point-of-sale and software landscape. Square is expanding its AI commerce strategy with a new ChatGPT app and Claude plugin. The initiative is designed to help sellers appear when customers ask AI assistants where to eat, shop or book services, while enabling users to place orders directly through those AI experiences. The initial rollout covers U.S. food and beverage sellers using Square Online Ordering.
Block is expanding its partner base to scale its distribution network. Last month, Sherwin-Williams selected Square as its payment solutions partner for its extensive network of PRO+ customers through the Digital Alliance Program. Additionally, the company partners with more than 140 independent sales organizations (ISOs) to complement its direct sales and extend reach to new sellers. Its merchant wins, including Ladurée Canada, Sofive Soccer Centers, Coffee Dose and Baker St Café, demonstrate its growing penetration across restaurants, specialty food, sports centers and retail businesses.
What Hinders Block Stock's Performance?
Despite its strengths, Block faces material headwinds. The company’s performance remains vulnerable to macroeconomic fluctuations and changes in consumer spending patterns. As a result, external forces may play a larger role than internal execution in shaping its trajectory in the upcoming quarters.
Cash App Borrow, Afterpay and Square Loans increase Block’s exposure to consumer and merchant credit risk as the lending portfolio scales. In first-quarter 2026, transaction, loan and consumer receivable losses rose to $500 million from $170 million a year earlier, reflecting rapid growth in Cash App Borrow originations and scaling of Afterpay Post-Purchase.
The company operates in crowded, fast-moving markets across merchant acquiring, POS/ software, consumer wallets and BNPL, where feature and pricing parity can change quickly. If competitors match features or undercut pricing, or if seller and consumer behavior shifts, Block may need to reinvest incremental gross profit to defend share, limiting the pace of operating leverage even when volume growth remains healthy.
XYZ’s Earnings Estimate Revision Trends Upward
The Zacks Consensus Estimate for Block’s 2026 sales calls for a year-over-year rise of 8.08%, while that for earnings per share (EPS) suggests a 64.56% increase year over year. EPS estimates have been trending upward to $3.90 per share over the past month.
Image Source: Zacks Investment Research
XYZ Shares Trade at a Discount
In terms of forward 12-month Price/Earnings (P/E), Block is trading at 25.97X, which is at a discount to Affirm’s 47.59X.
Image Source: Zacks Investment Research
Final Take on Block
Block is reinforcing its status as a leading fintech innovator through the steady expansion of the Square and Cash App ecosystems, reflecting the company’s strong execution.
While macroeconomic headwinds, changes in consumer spending, rising credit risk and competition warrant caution, Block’s discounted valuation, positive earnings estimates and solid fundamentals make XYZ stock an attractive buy for patient investors.
At present, Block carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>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
Block, Inc. (XYZ): Free Stock Analysis Report
StoneCo Ltd. (STNE): Free Stock Analysis Report
Affirm Holdings, Inc. (AFRM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).