The fintech sector remains active, as companies like Block XYZ and Upstart Holdings UPST continue to navigate evolving market conditions. Block offers digital financial tools for consumers and businesses, while Upstart draws investors' interest with its AI-powered lending platform.
Block excels through the dual ecosystem of Square for merchants and Cash App for consumers. Meanwhile, Upstart generates business by expanding into personal, auto and home finance.
Let’s weigh the pros and cons of Block and Upstart to find out which stock deserves a spot in your portfolio.
The Case for Block
Block continues to grow its comprehensive fintech platform, with its Square, Cash App and Afterpay ecosystems offering end-to-end solutions across payments, commerce, banking, investing and lending. XYZ’s first-quarter 2026 results reflected decent top-line performance and strong gross profit growth. Its net revenues increased 4.9% year over year, while the gross profit climbed 27.1%, with Cash App rising 38.3% and Square increasing 9.4%.
Square, which is Block’s merchant-facing ecosystem, remains solid. It posted 13.2% year-over-year growth in gross payment volume (GPV), fueled by innovations like Managerbot, which serves as a business assistant to monitor operations, provide insights and automate tasks for sellers. The company now partners with more than 140 independent sales organizations or ISO, complementing its direct sales efforts and expanding its reach to new sellers.
Square is strengthening its presence in the restaurant and retail franchise markets through commerce solutions. Recently, Magnolia Soap & Bath Co. selected Square as its unified commerce platform to power more than 50 retail franchise locations across 17 states. Similarly, this month, The Hat selected Square as its unified commerce platform to support operations across 11 locations as it expands beyond California. To expand further into restaurants, Square introduced Square for Drive-Thru to streamline workflow for quick-service restaurants (QSRs).
The biggest driver behind Block’s momentum is Cash App, which has evolved into far more than a peer-to-peer payments platform. It now serves as a multi-service financial hub, particularly for younger, digitally native consumers. With products spanning payments, banking, commerce and Bitcoin transactions, Cash App is broadening its role in users’ financial lives.
Despite competition in digital payments and geographic concentration in the U.S. market, Block’s diversified revenue streams and solid fundamentals make it a reliable choice for investors seeking fintech stocks with strong growth prospects.
The Case for Upstart
Upstart is a leading artificial intelligence (AI) lending marketplace that connects consumers to banks and credit unions via AI models for underwriting. The company makes money through platform/referral fees from its lending partners, loan servicing charges and proceeds from selling loans or securitizing them. In the first quarter of 2026, revenues climbed 44%, while originations rose 61% year over year.
The company is also moving quickly to maximize the use of AI across every part of the business. In servicing and collections, it doubled daily AI-assisted borrower conversation volume, brought that capability to its mobile app and expanded its AI-powered payment features. Upstart also deployed AI-driven quality assurance tools to review customer service calls, providing a scalable and consistent way to continuously improve the borrower experience. In the first quarter of 2026, 91% of loans were fully automated, with no human intervention.
It enables lending partners to originate credit through its AI lending marketplace. Recently, Community Choice Credit Union selected Upstart’s platform for personal lending. This directly supports higher transaction flow on its marketplace, reinforcing its revenue model tied to loan originations. Similarly, this month, Upstart partnered with USF Credit Union, enabling the credit union to offer personal lending.
Upstart has expanded beyond its core personal loan business into areas like auto lending, home equity lines of credit (HELOCs) and small-dollar loans. While these emerging segments are still smaller than personal loans, they're expanding quickly. In the quarter, auto originations were up 32% sequentially and more than 300% year over year, while home originations were increased 16% sequentially and 250% year over year. The rapid growth of these products sequentially reduced the overall take rate and contribution margin, but management expects the first quarter to represent the low point for contribution margin this year.
Broader macroeconomic uncertainty and ongoing volatility in credit markets, including shifts in funding availability, remain key risks. Moreover, in the first quarter of 2025, Upstart’s profitability declined sequentially as borrower demand softened after the tax-refund season, alongside higher annual employee-related expenses and some planned investments.
How Do Zacks Estimates Compare for XYZ & UPST?
The Zacks Consensus Estimate for Block’s 2026 sales and EPS indicates a year-over-year rise of 8.29% and 62.45%, respectively. EPS estimates have been trending upward over the past month.
Image Source: Zacks Investment Research
Meanwhile, the consensus estimate for Upstart’s fiscal 2026 sales and EPS implies a year-over-year increase of 36.53% and 29.31%, respectively. EPS estimates have been trending downward over the past month.
Image Source: Zacks Investment Research
Valuation: XYZ vs. UPST
From a valuation perspective, we note that Block shares are trading at a discount to Upstart.
In terms of forward 12-month Price/Sales (P/S), XYZ stock is trading at 1.55X, below INTU, which is currently trading at 1.84X. XYZ is currently trading above its one-year median of 1.51X, while UPST is trading below its one-year median of 3.83X.
Image Source: Zacks Investment Research
Price Performance: XYZ vs. UPST
Over the past three months, shares of XYZ have outperformed UPST and the S&P 500 composite.
Image Source: Zacks Investment Research
XYZ vs. UPST: Which Stock to Consider?
Both Block and Upstart remain dominant players in the fintech space. Block continues strengthening its position as a leading fintech innovator through its expanding Square and Cash App ecosystems. Ongoing volatility in credit markets and softening borrower demand remain major concerns for Upstart despite strong originations.
Block’s rising earnings estimates, discounted valuation and stock outperformance make it a smarter and lower-risk pick to consider for investors.
Currently, XYZ and UPST carry a Zacks Rank #3 (Hold) each. 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
Upstart Holdings, Inc. (UPST): Free Stock Analysis Report
Block, Inc. (XYZ): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).