A ChatGPT Partnership Is Lifting PayPal as AI and Shopping Continue to Pair Up
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Key Takeaways
- PayPal’s stock took off after the payment processor announced it was partnering with OpenAI on facilitating transactions within ChatGPT.
- Meanwhile, PayPal reported better third-quarter results than expected and increased its outlook for the fiscal year.
PayPal shares shot higher Tuesday after the company announced a partnership with ChatGPT operator OpenAI and released strong third-quarter results.
PayPal Holdings (PYPL) will extend its services to ChatGPT users, bringing the number of AI chat operators it’s helping handle e-commerce transactions to at least three. Those shopping via ChatGPT will be able to tap into PayPal’s consumer protection service, while merchants will be able to access PayPal’s payment processing tools, PayPal announced Tuesday.
PayPal’s alliance with OpenAI comes after established retailers, such as Walmart (WMT) and Etsy (ETSY), announced plans to sell to ChatGPT users. The partnerships are expected to bolster consumer trust in shopping via ChatGPT, analysts said.
“Hundreds of millions of people turn to ChatGPT each week for help with everyday tasks, including finding products they love, and over 400 million use PayPal to shop,” PayPal CEO Alex Chriss said in a statement. He said the partnership will “help people go from chat to checkout in just a few taps for our joint customer bases.”
Shares of PayPal were recently up some 9%, though they remain in the red year-to-date.
What This News Means for Investors
Americans, particularly younger ones, are using ChatGPT to shop, and are growing more confident that doing so is safe and secure. Others may begin to trust so-called agentic commerce as they hear about these shoppers’ experiences and see that businesses like PayPal are partnering with ChatGPT.
PayPal is working with other AI chat operators, including Perplexity and Alphabet’s (GOOG, GOOGL) Google, and allowing merchants to tap into their various chat systems by integrating their system once with PayPal, Chriss said Tuesday.
“We’ve got actually quite good scale and ubiquity across the ecosystem,” he sad on a conference call, according to a transcript made available by AlphaSense. “So [we’re] very well-positioned to win as Agentic Commerce continues to evolve.”
PayPal also released strong third-quarter numbers and raised its earnings outlook for the fiscal year. The company reported a 7% year-over-year increase in revenue to $8.4 billion—exceeding the $8.2 billion analysts were expecting, according to consensus analyst estimates compiled by Visible Alpha. That amounted to $1.34 in adjusted earnings per share, beating the $1.20 consensus estimate from Visible Alpha.
