BofA sees payments firms rebounding as fundamentals outshine AI anxiety

BofA Global Research reinstates coverage on Visa, Mastercard, Block, PayPal, Affirm and Klarna, saying the sector is mispriced as investors overreact to AI-driven disruption fears

Calls the overall outlook constructive, citing steady payments volumes, rising digital commerce penetration and improving cross-border trends

Visa and Mastercard flagged as the most defensive, high-quality opportunities, with valuations at their cheapest relative to the S&P 500 in years due to regulatory and AI concerns

BofA argues AI concerns are overstated, viewing AI instead as an operational tailwind that should support margin expansion across payments and BNPL

Macro backdrop seen as supportive, helped by steady U.S. spending and liquidity tailwinds such as higher tax refunds, adds brokerage