TLDR
- J.P. Morgan names Visa as its top pick in the payments sector for 2026 after the industry’s worst year since the Great Recession
- The firm upgraded Toast stock to Overweight with a $43 price target while downgrading PayPal and Fiserv to Neutral
- Visa shares trade near a 10-year valuation floor relative to the S&P 500 despite strong fundamentals
- The credit card giant’s move into blockchain finance, stablecoins, and tokenization positions it for growth in AI-enabled commerce
- J.P. Morgan’s 2026 strategy focuses on companies with pricing power and strong margins while avoiding turnaround stories
Visa stock earned top billing from J.P. Morgan analysts as the payments industry looks to rebound from its worst performance in 15 years. The investment bank named the credit card giant its number one pick for 2026 in a research note released Thursday.
The endorsement comes as payments stocks limp toward the end of 2025. The sector has posted its weakest returns since the Great Recession, excluding the pandemic year. Visa and Mastercard are two of the few bright spots, with both stocks showing small gains for the year.
J.P. Morgan analyst Tien-tsin Huang and his team said Visa “checks all the boxes” for their preferred investment framework. The firm is prioritizing companies with pricing power, strong incremental margins, and solid front-book momentum. Turnaround stories need not apply.
Visa stock gained 0.5% on Thursday to close the trading session higher. Mas
tercard shares dipped 0.2% as investors digested the broad research note covering multiple payment processors.
Blockchain Bets and AI Commerce
The company’s push into blockchain-powered finance caught J.P. Morgan’s attention. Visa is making moves in stablecoins and tokenization, technologies that could become foundational to agentic commerce. That’s the emerging field of AI-driven shopping and payments.
The analysts see tokenization as a potential catalyst for upside sentiment. The technology allows digital versions of payment credentials to be used securely across platforms. J.P. Morgan believes this positions Visa well as artificial intelligence reshapes how people buy things online.
Visa provided what the firm called “reasonable” guidance for fiscal year 2026. The analysts expect additional upside from tokenization pricing as adoption grows across merchants and payment platforms.
Valuation Floor Presents Opportunity
Here’s the kicker. Visa shares currently trade near a 10-year valuation floor relative to the S&P 500. The index slipped 0.04% on Thursday as broader markets showed mixed results.
That low relative valuation creates what J.P. Morgan sees as an attractive entry point. The firm gets a blue-chip name with strong fundamentals trading at a discount to its historical premium over the broader market.
The contrast with other payment stocks is stark. J.P. Morgan downgraded both PayPal and Fiserv to Neutral from Overweight in the same research note. PayPal shares have dropped 28% in 2025 through Wednesday’s close. Fiserv has collapsed 67% over the same period.
PayPal closed Thursday at $61.20, down slightly for the session. The company’s finance chief warned this week about sluggish growth in its branded checkout business. J.P. Morgan lowered its price target for PayPal to $70 from $85.
Fiserv stock fell 0.6% to $66.55 on Thursday. The merchant services provider slashed guidance in late October, triggering what analysts called an “emotional capitulation” among investors. J.P. Morgan nearly halved its price target for Fiserv shares to $85 from $155.
Toast stock was the other winner in J.P. Morgan’s analysis. The firm upgraded the point-of-sale provider to Overweight with a $43 price target. Toast shares rose 1.7% to $35.79 on Thursday, nearly erasing year-to-date losses.
The analysts praised Toast’s “unique brand affinity among restaurants” and expect the company to maintain industry-leading growth. Toast estimates have climbed 27% this year even as shares declined 6% through recent trading.
J.P. Morgan titled its research note “happy to flush 2025” as the firm looks ahead to what it hopes will be a cleaner year. The bank said slower growth and fears about commoditization weighed on sentiment across the payments sector. For 2026, the focus shifts back to basic fundamentals and proven business models. Visa fits that bill.
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