Bank of America reinstated coverage of major payment companies, maintaining a bullish stance on the sector despite recent sentiment pressure. The bank highlighted steady transaction growth and expanding digital commerce as key drivers, with Visa and Mastercard receiving Buy ratings as the strongest risk-adjusted opportunities.

BofA emphasized that card networks benefit from durable earnings, resilient fee structures, and strong cash flows as electronic payments gain global market share. The bank noted these models remain largely insulated from potential AI disruption, while recent stock weakness tied to regulatory and macro concerns has created attractive entry points.

In digital wallets, BofA rated Block a Buy with an $88 price target and PayPal Neutral with a $48 target. The bank sees Block entering 2026 with a lower cost base following a 40% workforce reduction tied to AI initiatives, while PayPal faces a "fundamental reset" with slowing growth in branded checkout despite strong free cash flow.