The fintech sector continues to attract investor interest, with companies such as PayPal Holdings (PYPL Quick QuotePYPL - Free Report) and Upstart Holdings (UPST Quick QuoteUPST - Free Report) offering exposure to different parts of the industry. PayPal is a major digital-payments platform, supported by its global checkout network, Venmo’s rising transaction activity, strategic partnerships and a multi-year cost-savings initiative. On the other hand, Upstart operates an AI-powered lending marketplace and has benefited from higher loan originations and strong revenue growth. Its personal loan AI model remains a positive.

The two companies also face different risks. PayPal must contend with intense competition and foreign-exchange movements, while Upstart remains exposed to credit-market conditions and the profitability challenges of newer businesses, particularly its secured lending products.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which stock is more attractive now.

The Case for PayPal

PayPal Holdings operates a two-sided digital payments network that connects consumers and merchants. The company provides branded and unbranded checkout, payment processing, peer-to-peer transfers, digital wallets and other financial and merchant services across approximately 200 markets worldwide. PayPal delivered decent second-quarter results, with revenues and Total Payment Volume (“TPV”) increasing 5% and 10%, respectively, year over year.

Venmo, PayPal’s money movement platform, has become a go-to wallet for younger, digitally native consumers. Venmo launched its 2026-2027 Name, Image and Likeness (“NIL”) campaign with nine student-athletes. It also introduced Money Moves initiative, allowing athletes receive part of their NIL earnings on Venmo and use the platform to give back to their communities. Moreover, Venmo’s TPV rose 14% year over year in the second quarter of 2026, marking the seventh straight quarter of double-digit growth.

PayPal is expanding its presence in college payments by adding PayPal and Venmo as tuition payment options through integrations with Illumia, Nelnet Campus Commerce and TouchNet. Students and families at participating schools can pay tuition fees through their school portals. The move connects PayPal with education-payment platforms that collectively serve thousands of U.S. colleges and universities.

PayPal is executing a major transformation plan aimed at saving more than $1.5 billion over the next two to three years. The company expects the first wave of savings to come from structural realignment, including the removal of duplication and layers from its organizational structure. A second wave is expected to result from broader AI deployment and automation initiatives. Management believes these savings will provide greater flexibility to reinvest in growth initiatives and strengthen the company’s long-term financial profile.

However, PayPal faces macroeconomic headwinds and operates in a highly competitive global payments industry. The company’s international footprint makes reported results sensitive to currency movements. Still, strong Venmo growth, expanding payment use cases, AI-driven initiatives and targeted cost savings should support growth and efficiency, helping offset these near-term challenges.

The Case for Upstart

Upstart is an AI-powered lending marketplace that connects consumers with banks and credit unions. The company earns platform and referral fees from lending partners, servicing fees on loans facilitated through its platform, and other origination and loan-sale-related fees. In the second quarter of 2026, revenues rose 42% year over year, while originations increased 50%.

Upstart’s core technology remains a competitive edge. In second-quarter 2026, its personal loan AI model was 2.74 times more accurate than a traditional credit model, while 91% of funded loans were processed end to end without human intervention. Funding capacity also strengthened, with committed capital capacity reaching $10.8 billion through Aug. 4, supported by a new Castlelake forward flow facility of up to $4 billion.

Upstart enables lending partners to originate credit through its AI lending marketplace while expanding its credit union footprint. In September 2026, Upstart expanded its partnership with Commonwealth Credit Union to add home equity lines of credit (HELOCs) and indirect auto lending, extending its AI-powered lending marketplace into secured credit. The expansion builds on the two companies’ personal-lending partnership, which began in 2022. As of June 30, 2026, Upstart reported working with more than 100 banks and credit unions that use its AI lending marketplace.

However, newer businesses continue to lag. Auto and Home originations are growing quickly, but their combined contribution margin remained negative at 35% in the second quarter of 2026. Management expects these businesses to reach breakeven by the fourth quarter, although achieving that target will require continued execution.

Moreover, macro sensitivity is also harder to ignore. Upstart Macro Index ("UMI") stood at 1.50 as of Sept. 3, 2026, unchanged from early August and about 50% above its “normal economy” baseline of 1.0. The UMI has remained above 1.0 since early 2022, reflecting a sustained period of elevated default risk.

How Do Zacks Estimates Compare for PYPL & UPST?

The Zacks Consensus Estimate for PYPL’s 2026 sales and earnings per share (EPS) implies a year-over-year increase of 4.5% and 1.3%, respectively. 2026 EPS estimates have been trending northward over the past two months.

Image Source: Zacks Investment Research

Meanwhile, the consensus estimates for UPST’s 2026 sales and EPS indicate a year-over-year rise of 36% and 26.4%, respectively. However, 2026 EPS estimates have been trending downward over the past two months.

Image Source: Zacks Investment Research

Price Performance: PYPL vs. UPST

Over the past three months, shares of PYPL have outperformed UPST and the S&P 500 composite.

Image Source: Zacks Investment Research

Valuation: PYPL vs. UPST

In terms of forward 12-month Price/Earnings (P/E), PYPL stock is trading at 9.66X, below UPST, which is currently trading at 16.13X. PYPL is trading above its one-year median of 9.39x, while UPST is trading below its one-year median of 25.69x.

From a valuation perspective, we note that PYPL shares are trading at a discount to UPST.

Image Source: Zacks Investment Research

Conclusion: PayPal Remains Strong

Both PayPal and Upstart are notable fintech players, but they represent different investment opportunities. PayPal benefits from its two-sided payment network, improving engagement and monetization at Venmo and a cost reduction program. However, it continues to face intense competition and sensitivity to broader economic conditions.

Upstart, by contrast, offers an AI-driven lending platform with growth potential, although its performance remains sensitive to credit-market conditions. The company’s elevated UMI remains a risk, signaling that defaults and credit losses could remain above normal levels.

PayPal’s Venmo monetization, cost-driven operating leverage, discounted valuation and positive consensus estimate revisions make PYPL a compelling core fintech holding for investors seeking scale and cash-flow durability.

Currently, PYPL carries a Zacks Rank #3 (Hold), while UPST has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.