Analyst Sentiment Cools on PayPal Despite AI Commerce Push

PayPal US70450Y1038

While PayPal Holdings, Inc. makes a strategic move to embed its services within the artificial intelligence landscape, financial analysts are responding with a wave of price target cuts. The divergence highlights a growing skepticism on Wall Street about whether technological initiatives can swiftly counteract the company's broader growth challenges.

All eyes are now on February 3, 2026, when PayPal is scheduled to release its fourth-quarter earnings. Market consensus anticipates earnings per share to come in at $1.29. The report, and more importantly the forward-looking commentary from management, is viewed as a pivotal moment. It could determine if the company can shift the prevailing narrative. The average analyst price target currently sits at $78, a figure notably above the stock's recent trading level. However, the trend in recent revisions suggests eroding confidence in a near-term rebound.

Price Targets Face Downward Revisions

This cautious outlook was made explicit through several analyst actions. On January 12, TD Cowen adjusted its stance, lowering the price target to $65 from $80 while maintaining a "Hold" rating. The firm cited a lack of short-term catalysts, suggesting even the upcoming earnings report may not be enough to alter momentum.

Goldman Sachs also made a slight reduction, moving its target to $64 from $65 and reiterating a "Sell" recommendation. Earlier, Susquehanna had already trimmed its target from $94 to $90, pointing to decelerating growth within PayPal's core branded checkout business. The collective message from researchers is that structural headwinds carry more weight than isolated product innovations.

AI-Powered "Agentic Commerce" Initiative Launched

The backdrop to this analyst caution is a significant new product launch. On January 12, 2026, PayPal, in partnership with Microsoft, introduced "Copilot Checkout." This feature integrates PayPal's payment processing directly into Microsoft's AI assistant, Copilot. The system allows users to discover, select, and complete purchases for products entirely within the chat interface, bypassing traditional e-commerce websites.

PayPal released internal data indicating the potential of such AI-driven commerce. The company claims that AI-guided purchasing journeys result in 53% more completed purchases compared to conventional methods within a 30-minute window. Furthermore, the conversion rate is reported to be 194% higher. This positions PayPal in the emerging field of "Agentic Commerce," where AI agents actively assist in finalizing transactions.