Shares of Visa Inc. (V Quick QuoteV - Free Report) are gaining momentum, powered by strong transaction growth, favorable estimates and strategic bets on digital payments and stablecoins. The stock recently broke above its 50-day simple moving average (SMA), a bullish technical indicator that often marks the start of an uptrend, signaling improved sentiment and room for further upside.

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Visa closed at $354.22, still 5.7% below its 52-week high of $375.51 and trading at an 8.6% discount to the average Wall Street price target of $385.91. Year to date, the stock is up 12.1%, outperforming the broader industry, the S&P 500, and key rivals like Mastercard Incorporated (MA Quick QuoteMA - Free Report) and American Express Company (AXP Quick QuoteAXP - Free Report) .

Visa YTD Price Performance Comparison

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So, does Visa’s recent strength make it a smart buy right now? Let’s break down the key factors driving its performance to assess whether this could be a timely entry point for investors.

Growth Drivers Behind Visa’s Rally

Visa continues to benefit from strong spending among affluent consumers, solid retail activity, and steady demand in travel and dining. Processed transactions rose 10% in fiscal 2024 and 10.2% in the first half of fiscal 2025, while payments volume increased 6.7% and 6.3%, respectively. With a market capitalization of $655.9 billion and a dominant global presence, the company is poised for sustained growth.

Emerging markets, where a large portion of the population remains underbanked, offer additional expansion potential. In the first half of fiscal 2025, payments volume rose 6.1% year over year in Latin America and 14.2% in CEMEA, offsetting a 1.2% decline in Asia Pacific. We expect total payments volume to grow 6.5% in fiscal 2025.

Tech & Crypto: Visa Building the Future of Payments

Visa is aggressively investing in next-gen payment technologies. In April 2025, it launched Visa Intelligent Commerce, integrating AI into payments to allow digital agents to search, compare and purchase on behalf of users. It is also expanding contactless and scan-to-pay capabilities, helping diversify its revenue streams. These initiatives, along with Visa’s value-added services, will help it further diversify revenues.

Visa is expanding its footprint in digital finance by allowing banks to issue digital tokens and pilot stablecoin settlements directly on its vast network. The company is leveraging its core strengths, including global scale, trusted infrastructure, built-in fraud protection and advanced tokenization technology, which secures sensitive data at checkout.

While consumers remain loyal to the perks and protections that come with traditional card payments, stablecoins lack features like credit access and FDIC insurance. For merchants, adopting new payment technologies can also pose challenges, including regulatory compliance, operational adjustments, and tax implications.

Despite these hurdles, Visa is doubling down on stablecoin innovation to improve the speed, cost-efficiency and security of cross-border payments. Through partnerships with fintech firms like Bridge, Baanx and Rain, as well as a strategic investment in BVNK, Visa is laying the groundwork for a scalable, secure, stablecoin-based payments infrastructure to support future digital currency transactions.

Solid Financials and Shareholder Returns

Visa’s strong cash flow, up 26.4% in the first half of fiscal 2025, supports reinvestment in innovation and partnerships. Its trailing 12-month return on capital stands at 35.7%, well ahead of the industry average of 26.4%.

The company also remains shareholder-friendly. In the latest quarter, Visa returned $5.6 billion via dividends and buybacks. It had $4.7 billion under its repurchase program and launched a new $30 billion authorization in April. Visa’s 0.67% dividend yield closely matches the industry average of 0.62% and comes with a consistent track record of increases.

Zacks Estimates: More Growth Ahead for Visa

The Zacks Consensus Estimate for Visa’s fiscal 2025 and fiscal 2026 EPS implies a 12.9% and 12.4% uptick, respectively, on a year-over-year basis. The earnings estimates remained stable over the past week. It beat earnings estimates in each of the past four quarters, with an average surprise of 3%.

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Also, the consensus mark for fiscal 2025 and fiscal 2026 revenues suggests a 10.2% and 10.7% increase, respectively.

Visa’s Valuation: Confidence Still High

From a valuation perspective, Visa is trading higher than the industry, a sign of investor confidence. Going by its price/earnings (P/E) ratio, the company is trading at a forward earnings multiple of 28.52X, higher than its five-year median of 26.92X and the industry average of 22.90X.By comparison, Mastercard trades at 32.41X and American Express at 20.02X, placing Visa somewhere in the middle.

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Visa’s Risks to Watch

Visa faces headwinds from rising costs and mounting regulatory scrutiny. Adjusted operating expenses rose 10.8% in fiscal 2024 and 9.2% in the first half of fiscal 2025, while client incentives grew 11.9% and 14%, respectively.

Regulators in the United States and Europe are turning up the heat. The DOJ had accused Visa and Mastercard of using their dominance to overcharge merchants, while the Credit Card Competition Act could introduce more competition, affecting their pricing power. In the U.K., a tribunal ruled that their interchange fees breach European competition laws, increasing the risk of new regulations. Also, the U.K.’s Payment Systems Regulator will likely introduce fee limits.

Wrapping Up: A Promising Entry Point for Investors?

Visa’s recent breakout above its 50-day SMA, solid year-to-date performance and strong fundamental growth drivers make a compelling case for investors. With robust transaction volumes, steady expansion in emerging markets, and strategic investments in AI and stablecoin infrastructure, Visa is not only adapting to the future of payments, it is helping shape it.

Backed by consistent earnings beats, shareholder-friendly moves and above-average returns on capital, Visa remains a high-quality stock with a proven track record. While regulatory headwinds and rising costs warrant monitoring, they do not overshadow the company’s strong positioning and future potential.

Given its combination of financial strength and innovation, Visa appears to be a smart buy at current levels, particularly for investors looking for stable growth in the digital payments space. Visa currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.