PayPal places its bets on emerging AI tech

• Key insight: PayPal's earnings beat Wall Street analysts estimates. 
• What's at stake: The payment company has entered partnerships with high-profile technology firms to compete in agentic AI and generative AI. 
• Forward look: PayPal plans to invest in marketing and technology for AI, which could add to the company's costs in the coming months. 

PayPal started its second quarter earnings call with two big artificial intelligence announcements, including a partnership with ChatGPT developer OpenAI and the launch of its own agentic commerce service. 
"Agentic commerce will take time, but we believe consumer behavior will shift," PayPal CEO Alex Chriss said during Tuesday's earnings call. 

For the quarter ending September 30, PayPal reported net revenue of $8.4 billion, up 6% from the prior year, and earnings per share of $1.34, up 12%. That beat analyst projections of $8.2 billion and EPS of $1.19, according to Zacks Investment Research.

PayPal's AI

As part of its OpenAI partnership, PayPal will support ChatGPT Checkout, which lets users complete purchases using a PayPal wallet. PayPal will also process payments for merchants using OpenAI's Instant Checkout. ChatGPT, a form of generative AI, helped spark a wave of investment in AI over the past two years that has included much of the financial services industry. 

"This is a big win for PayPal," Chriss said.

In another move on Tuesday, PayPal released Agentic Commerce Services. This includes payment support, order management and connections between merchants and product data, fulfillment and AI-powered checkout. 

A feature called PayPal "agent ready" enables merchants to accept payments via different AI programs; while another feature called "store sync" makes merchant data discoverable within AI channels, including the ability to route orders to their existing fulfillment and management systems.

"Merchants will need to figure out how to integrate with multiple large language models, which can be a challenge for small businesses," Chriss said.   

PayPal has made several AI deals during the previous three months. The payment company on Monday announced a collaboration with Mastercard in which Mastercard's Agent Pay will integrate with PayPal's branded checkout digital wallet. This will enable AI agents to complete transactions on behalf of PayPal users. Mastercard and PayPal will also collaborate on future uses for agentic AI in shopping and payments.

PayPal earlier this summer partnered with Google on agentic shopping and commerce, embedding PayPal technology in Google's platforms, expanded payment processing and collaborating on cloud-delivered technology. Google and PayPal are additionally working on AI-powered shopping experiences and standards for agentic AI.In another AI move, Venmo and PayPal customers in the U.S. and limited global markets were given early access to Perplexity's AI-powered Comet Browser. Comet gives PayPal's customers a generative-AI tool to manage subscriptions, shopping, payments and other parts of their lives. 

In addition to AI, PayPal is also attempting to expand its stablecoin business. PayPal's efforts to scale its PYUSD stablecoin during the quarter included the release of PayPal Links, a service that enables consumers to request or make a payment to another person by using a link that is inserted into a digital conversation. Another recent release, Pay with Crypto, connects merchants to enable instant crypto or stablecoin to traditional currency conversion. Pay with Crypto covers more than 100 cryptocurrencies such as bitcoin, ether, USDC and PYUSD, and connects to wallets including Coinbase, Binance and Metamask."We need to be available everywhere a consumer wants to make a payment," Chriss said.  

PayPal additionally plans to boost marketing for Venmo and BNPL, and expand BNPL to new markets such as Canada and expand terms in Europe. Venmo averages $25 revenue per active Venmo account, Chriss said, adding there is room to expand that through links to other products such as Venmo's debit card. "The upside is a multiple of where we are today," Chriss said. 

The focus on AI will boost investments in technology and marketing, which PayPal said could cause "some headwinds," but will address "exciting" opportunities. 

Branded checkout

PayPal's third quarter profit was $1.25 billion, up from $1.01 billion the prior year. Total payment volume was $458.1 billion, up 7% from the prior year. The payment company projected full-year EPS of $5.15 to $5.30, up from its prior projection of $4.95 to $5.10. Analysts' projections are $5.10. 

PayPal's branded checkout volume grew 5% during the third quarter. PayPal's stock has sunk 17% in 2025 as the company focuses on its core payment business following a deeper slump in 2022 and 2023. 

Investors are keeping a close eye on PayPal's branded checkout growth as a signal of consumer strength and the company's growth. In the second quarter, PayPal's branded payment volume growth slowed to 5% year over year, compared to 6% in the first quarter of 2025, which Jeffries analysts attributed to pressure from President Trump's tariffs. In an analyst note, Citi said meaningful growth in branded checkout has "failed to materialize," adding PayPal faces headwinds due to tariffs. 

In another research note, Jeffries said, "Lack of visibility into an eventual branded payments acceleration (and no tangible benefits to date from the targeted initiatives) leaves the [stock's trajectory] stuck."

Chriss said the 5% branded online checkout growth was "solid growth, especially with choppy macroeconomic trends. We know there is work to do." PayPal is focusing on areas such as biometrics, scaling its redesigned checkout experience and moving into new markets to boost branded checkout, Chriss said. 

"We expect a positive reaction in shares driven by the aforementioned OpenAI partnership," JPMorgan analysts said in a research note. 

PayPal's stock rose more than 12% in early trading on Tuesday.