40% off select models. Up to 70% off clearance. Limit one coupon code per customer.

We’ve been bombarded with Black Friday deals for weeks now. What used to be a one-day-only, in-store event has turned into a month-long celebration of “the best deals of the year.”

So, in the spirit of the week, I’d like to share a relatively cheap and underappreciated AI play that I’ve been watching throughout 2025.

Let’s take a look…

PayPal Holdings Inc. (PYPL) is a titan of the digital payments industry.

The company traces its history to the year 2000, when Elon Musk merged his online bank, X.com, with Peter Thiel’s software company, Confinity, to form PayPal. The merged entity started spinning gold almost immediately for Musk and Thiel, as the inventive pair sold the company to eBay Inc. (EBAY) just two years later for $1.5 billion.

Then in 2015, eBay spun out PayPal as a separately traded company, which it has remained ever since. (Interestingly, 2015 was also the year that Musk and Thiel partnered up again to form OpenAI, the company that would go on to create the AI sensation, ChatGPT.)

PayPal’s dominant position in the “branded checkout” segment has powered most of its growth. The “PayPal/Venmo” checkout button you might see when shopping online is an example of that business. Around 80% of the top 1,500 retailers in North America and Europe feature PayPal in their digital wallets.

But PayPal is not taking its success for granted. The company is fortifying its market leadership by integrating leading-edge AI and machine-learning processes into key aspects of its operations. For example, the company uses AI to detect fraudulent transactions and to boost the approval rate of valid transactions.

Now, PayPal is getting ready to dominate a new market…

Agentic AI commerce.

Starting in 2026, OpenAI will integrate PayPal’s wallet and payment technology into ChatGPT’s “Instant Checkout” experience. This will allow users to complete purchases directly inside the chatbot.

PayPal controls the full checkout user interface (UI) and authentication flows. That means an AI agent can open sessions, request approval, store consent, and authorize transactions, all within a single session.

That makes it far easier to monitor AI agents and add appropriate guardrails. And if an AI makes an honest mistake, PayPal can easily reverse the transaction without going through merchant banks. It’s a one-stop payments shop.

In other words, agentic e-commerce will be a game-changing technology, even if the details are not yet fully known. Generative AI is not limited to text and speech… nor is it even limited to real-life photos or videos. Instead, it could become a personal shopper that generates outputs in whatever format you choose.

And that means PayPal is sitting at the cusp of a potential breakout.

Perhaps the most remarkable aspect of PayPal today is its valuation.

The San Jose, California-based company is priced more like a zero-growth merchant bank than a fintech platform. A post-Covid slowdown in e-commerce spooked markets, and investors were concerned that PayPal had chased unprofitable businesses during the boom years.

This is an exaggeration of PayPal’s “demise.”

Over the next three years, analysts expect this fintech company’s revenues to grow 19% and its profits to rise 31%. And if AI agentic commerce truly takes off, we will see these growth numbers occur at an annual pace instead.

— Eric Fry

The Guy Who Beat Buffett Shocks the World Again… [sponsor]
The New York Times called him "an icon among growth stock investors." The Wall Street Journal said "Most money managers can only dream of having the same success" he's had. His investment fund produced a 4,000% return over a 15-year span, outperforming even the great Warren Buffett. His name is Louis Navellier. And he's just issued an astonishing financial prediction. Click here to see it.

Source: Investor Place