Hello, Reader.
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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.
There’s your Black Friday bargain… on Monday.
PayPal isn’t the only underappreciated AI play that I recommend. You can check out my other Black Friday bargains at Fry’s Investment Report.
Now, let’s look at what we covered here at Smart Money this past week…
Smart Money Roundup
November 19, 2025
The Healthcare Discount Too Big to Ignore
In a market obsessed with AI stocks, few investors seem to care how extensively the biopharmaceutical industry has integrated AI technologies. That oversight is exactly what creates opportunity. Away from the crowds and the blinding lights, drug companies are quietly entering a period of renewed strength, much like they did in the early 1990s. That’s why I’m raising a glass to an overlooked biopharmaceutical company with the hidden capacity to deliver outsized gains.
November 20, 2025
Don’t Be Fooled by Nvidia’s Earnings – Why It’s Still a “Sell”
Celebrations ensued last week as Nvidia’s stock rallied after it reported third-quarter earnings, though it fizzled almost immediately. Either way, it’s a major “Sell” in my book. So, I’ll explain why you should keep Nvidia out of your portfolio. Then, I’ll share another Big Tech stock I believe is a “Sell,” and tell you about some companies you should shift your attention to instead. Click here to read more.
November 22, 2025
The Market Now Runs on Two Engines – and Only One Is Built to Last
The defining feature of late-2025 America is an economy with two heartbeats: One is pulsing with stock-market wealth and travel points, the other murmuring under credit strain and job anxiety. That imbalance might drop a banana peel in the stock market’s path. No reason to panic just yet, but ample reason to prepare. So, let’s take a closer look at this economic split personality… and the new challenges and considerations it presents for investors.
November 24, 2025
The Fed Can’t Fix U.S. Housing – Here’s How The White House Might
The American housing market is reaching a breaking point. What’s unfolding isn’t a typical real estate cycle; it’s a structural crisis affecting young families, retirees, builders, lenders, and investors alike. But where there’s crisis, there’s also the potential for a policy-driven reset. Luke Lango joins us to break down why the system is so broken, what levers the White House could pull, and which companies stand to benefit most if this policy catalyst hits.
Looking Ahead
Now, PayPal isn’t the only entity pioneering a new AI era.
The U.S. government has launched a modern “Manhattan Project for AI” – a multitrillion dollar effort to secure America’s dominance in artificial intelligence. As part of this initiative, Washington is partnering directly with select U.S. companies it views as critical to winning the AI race.
These government-backed companies are soaring as high as 400% in as little as a week when investment or contracts hit the news.
My InvestorPlace colleague Luke Lango has identified seven companies that he believes are next in line for government support and could reasonably soar 10X as this AI boom accelerates.
He will be joining us in your next Smart Money issue to detail how Washington is creating the next generation of AI millionaires… and where you can access the companies he believes are set to profit.
So, be sure to keep an eye on your inbox.
Regards,
Eric Fry
Editor, Smart Money
