American Express Company AXP and PayPal Holdings, Inc. PYPL are two major players in the digital payments industry, operating in a market shaped by rising electronic transactions, expanding e-commerce activity and increasing demand for integrated financial services. The payments landscape continues to evolve as companies focus on strengthening customer engagement, expanding merchant acceptance and improving digital payment capabilities across online and offline channels.
While both companies benefit from the broader shift toward cashless transactions, their operating models and strategic priorities differ significantly. American Express relies on its closed-loop network, premium card portfolio and lending operations to drive growth, whereas PayPal is focused on digital wallets, online checkout and merchant payment solutions within the global e-commerce ecosystem. With both companies investing in technology, partnerships and platform expansion, their growth drivers and margin profiles remain distinct.
Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one has more upside now.
The Case for American Express
American Express, with a market cap of $211.3 billion, continues to benefit from resilient spending trends across its premium customer base, with billed business rising 10% year over year in the first quarter of 2026. Spending remained healthy across travel, dining, luxury retail and entertainment categories, while refreshed Platinum cards continued driving higher engagement and retention.
The company’s focus on affluent and younger consumers remains a key long-term growth driver. Millennials and Gen Z customers continued showing strong spending growth, while more than 70% of newly acquired accounts came from fee-paying products. It is also witnessing higher wallet share from these customers over time, helping support sustainable revenue growth across card fees, payments and lending products.
American Express continues to strengthen its premium membership ecosystem through expanded partnerships and lifestyle offerings. During the first quarter, the company announced new agreements with the NFL, NBA and several major entertainment venues while also expanding airport lounges and premium travel programs. Higher engagement across hotels, dining and travel-related benefits reinforces the value proposition of its premium card portfolio. In the first quarter of 2026, total revenues (net of interest expenses) increased 11% year over year, while total transactions rose 10%. The company beat earnings in three of the past four quarters and missed once, with an average surprise of 4%.
American Express Company Price, Consensus and EPS Surprise
American Express Company price-consensus-eps-surprise-chart | American Express Company Quote
AXP continues to expand its long-term growth initiatives through higher investments in commercial products, technology and digital capabilities. The company introduced a broad pipeline of new business payment products, expense management tools and software offerings targeted at small and mid-sized businesses. It is also accelerating investments in AI, automation and platform modernization to improve customer experience, strengthen fraud protection and support future growth across its payments network.
As of March 31, 2026, the company had $53.8 billion in cash and cash equivalents against just $1.7 billion in short-term debt. AXP returned $7.6 billion to its shareholders in 2025 and $2.3 billion in the first quarter of 2026 through dividends and buybacks. In March 2026, it raised its quarterly dividend by 16% to 95 cents per share. However, its dividend yield of 1.2% is lower than PYPL’s 1.3%.
Continued investments in marketing, rewards programs and customer value propositions are central to the company’s growth strategy but may keep the expense base elevated relative to revenues. Total expenses rose 11.1% year over year in 2025 and 11% in the first quarter of 2026.
The Case for PayPal
PayPal, with a market cap of $39.2 billion, is restructuring its operations around its three core businesses — PayPal checkout, Venmo and Braintree — as part of a broader effort to improve execution and drive profitable growth. The company is simplifying priorities, streamlining investments and focusing resources on areas with stronger long-term return potential, while leveraging its two-sided network that connects consumers and merchants across its broader payments ecosystem.
Venmo and PSP continue to represent key growth opportunities within PayPal’s platform. The company is expanding deeper into branded checkout, payment processing and financial services while increasing monetization opportunities across Venmo. Growing adoption of digital payments, flexible checkout options and merchant integrations continues to support engagement across both consumer and enterprise users. In March 2026, Venmo announced a major expansion, extending its peer-to-peer payment experience to users worldwide across 90 markets. The company’s total payment volume rose 11% year over year in the first quarter of 2026, along with 7% growth in payment transactions.
PayPal is also focusing on AI-driven transformation and platform modernization. The company is deploying AI across customer service, engineering, operations and risk management to improve efficiency, automate workflows and accelerate product development. Technology modernization efforts are expected to improve the scalability and performance of its payments infrastructure over the long term. In the first quarter of 2026, net revenues grew 7% year over year. It beat earnings estimates in three of the past four quarters with an average surprise of 5.3%.
PayPal Holdings, Inc. Price, Consensus and EPS Surprise
PayPal Holdings, Inc. price-consensus-eps-surprise-chart | PayPal Holdings, Inc. Quote
PayPal continues to forge strategic partnerships to expand its offerings and global presence. The company exited the first quarter of 2026 with cash and cash equivalents of $7 billion. It returned $1.5 billion to its shareholders by repurchasing shares of common stock in the first quarter of 2026.
However, in the first quarter, total operating expenses rose 9.6% year over year due to higher transaction expenses, customer support and operations, and technology and development costs. PayPal also faces macroeconomic headwinds and operates in a highly competitive global payments industry. Its nature of business makes it vulnerable to foreign exchange fluctuations. The company also issued weaker-than-expected 2026 guidance, where TM$ is anticipated to decline slightly alongside an adjusted EPS range of a low single-digit decline to a slightly positive gain.
How Do Estimates Compare for AXP & PYPL?
The Zacks Consensus Estimate suggests sharper earnings momentum for AXP. The consensus estimates for AXP’s 2026 earnings indicate a 14.4% increase from a year ago, followed by 14.3% growth next year. Meanwhile, the consensus estimate for 2026 revenues suggests 9.4% growth.
On the other hand, the Zacks Consensus Estimate for PYPL’s 2026 EPS indicates a 0.2% year-over-year decline, followed by 9.6% growth next year. The consensus estimate for 2026 revenues suggests 3.2% growth.
Valuation: AXP vs. PYPL
Coming to the valuation story, it seems that investors are willing to pay a premium for American Express compared to PayPal. This is reflected in AXP’s forward 12-month price/earnings (P/E) of 16.68X compared with PYPL’s 8.06X. Both are currently trading below their three-year median P/E value.
Image Source: Zacks Investment Research
Price Target
AXP currently trades below its average analyst price target of $363.62, implying a 17.4% potential upside from current levels. PYPL also trades below its average analyst price target of $49.44, implying an 11.4% potential upside from current levels.
Price Performance Comparison
Over the past year, shares of AXP have outperformed PYPL. Meanwhile, the S&P 500 has increased 32.4% during this time.
Price Performance – AXP, PYPL & S&P 500
Image Source: Zacks Investment Research
Conclusion
Overall, both American Express and PayPal are benefiting from the ongoing shift toward digital payments. PayPal remains attractive due to its Venmo expansion, merchant payment solutions and AI-driven transformation, but weaker earnings growth and softer guidance may limit near-term upside.
On the other side, American Express appears better positioned at this stage, backed by its stronger earnings momentum, resilient premium customer base and expanding lifestyle and commercial payments ecosystem. The company continues to deliver healthy spending growth, robust shareholder returns and consistent execution across both consumer and business segments.
Despite trading at a higher valuation, AXP’s superior growth outlook and stronger fundamentals make it the more compelling fintech stock right now, even though both companies currently carry a Zacks Rank #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).