There are many trends shaping our economy. And while everyone seems to remain fixated on artificial intelligence (AI), it's important not to forgot about a trend that has been ongoing for several years.
I'm talking about the intersection of financial services and technology, otherwise known as fintech. This category includes both younger and faster-growing enterprises, as well as those that are a bit more mature. Nonetheless, given the rising importance of these businesses, investors should consider allocating capital to the industry.
Here are two of the smartest fintech stocks that investors can buy with $1,000 right now.
Image source: Getty Images.
Leading digital payments for over two decades
The first fintech stock to add to your portfolio is none other than PayPal(NASDAQ: PYPL), which has been leading the digital payments revolution for more than 25 years. The company is known for its flagship PayPal branded checkout solution and commerce app, but it also has a merchant-facing solution known as Braintree, as well as the popular peer-to-peer app called Venmo.
While the company isn't growing like it was during the depths of the pandemic, PayPal still reported a 1% year-over-year revenue jump in Q1 2025 (ended March 31). This was driven by a 3% increase in total payment volume. Greater activity is supported by new product features launched under Chief Executive Officer Alex Chriss. What's more, PayPal is focused on expanding its advertising capabilities, which makes sense, given all the data it collects on purchase behavior.
The beauty of being a scaled platform is that PayPal benefits from a powerful network effect. As more merchants participate in the ecosystem, having a PayPal account becomes more valuable for consumers. The opposite is also true, with merchants finding more utility as the number of individual accounts grows.
Another advantage of PayPal's scale is that it is an extremely profitable company. It posted $1.5 billion in operating income in the first quarter, translating to a stellar operating margin of 19.6%. This bottom-line performance lets management spend sizable amounts on share repurchases, to the tune of a planned $6 billion in 2025.
As of this writing, PayPal shares trade at a forward price-to-earning (P/E) ratio of just 14.8. This seems like a deal that's too good to pass up.
Operating two successful ecosystems
The other fintech stock to buy as part of a $1,000 investment is Block(NYSE: XYZ). The company operates two successful ecosystems. Posting 9% gross profit growth in Q1 is Square, which caters specifically to the financial needs of merchants. On the other side is Cash App, a popular personal finance app with 57 million monthly active users that's growing even faster than Square.
According to the company's estimates, Square and Cash App both have huge total addressable markets, with a combined gross profit opportunity of $205 billion. By introducing new products and services, the business hopes to draw in new customers, while cross-selling to existing ones to increase monetization.
Block is starting to show just how profitable it can be. Thanks to expense controls, adjusted operating income totaled $1.6 billion in 2024, a huge improvement from the year before. And for 2025, the outlook is for $1.9 billion in adjusted operating income.
In 2018, Cash App started letting customers buy and sell Bitcoin. These days, the world's leading cryptocurrency is commanding more of management's time and resources. For example, Block now sells a hardware wallet, and it's working on offering mining equipment. Block founder and CEO Jack Dorsey is focused on boosting Bitcoin's utility and widening its adoption.
Shares of Block aren't as cheap as PayPal's, as the former trades at a forward P/E multiple of 16. But given the earnings trajectory of Block, that valuation looks very reasonable to start a position.
Investors looking to gain immediate fintech exposure in their portfolios should look no further than PayPal and Block, two undeniable market leaders.
Should you invest $1,000 in PayPal right now?
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.
