PayPal Holdings (PYPL) Traded Down as Market Sentiment Rotated

Wedgewood Partners, an investment management company, released its third-quarter 2025 investor letter. The letter is available for download here.  AI stocks remain the favorite topic of Wall Street in the third quarter. In the third quarter, Wedgewood Composite’s net return was 5.9% compared to the Standard & Poor’s 8.1%, the Russell 1000 Growth Index’s 10.5%, and the Russell 1000 Value Index’s 5.3% return for the same period. In addition, you can check the fund’s best 5 holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Wedgewood Partners highlighted stocks such as PayPal Holdings, Inc. (NASDAQ:PYPL). PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology platform that enables digital payments. The one-month return of PayPal Holdings, Inc. (NASDAQ:PYPL) was 3.23%, and its shares lost 13.34% of their value over the last 52 weeks. On October 21, 2025, PayPal Holdings, Inc. (NASDAQ:PYPL) stock closed at $70.05 per share, with a market capitalization of $66.924 billion.

Wedgewood Partners stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its third quarter 2025 investor letter:

"PayPal Holdings, Inc. (NASDAQ:PYPL) was a leading detractor in portfolios during the third quarter despite growing earnings per share +18% and growing adjusted transaction margin dollars +8%. The Company saw double-digit growth in their Venmo-branded revenue as they further expanded their monetization initiatives with merchants and consumers, including Pay With Venmo and the Venmo Debit Card. In addition, the Company has negotiated better economics with its high-volume processing segment, Braintree, which we expect should help accelerate revenue growth later this year and into 2026. Shares continue to trade at depressed multiples as the market has rotated into AI-focused tech and cryptocurrency-related financials. PayPal is being prudent with its investments in both those emerging areas of commerce, partnering with Google in agentic commerce solutions, and also expanding issuance and acceptance of PayPal U.S. dollar stablecoin."

PayPal Holdings, Inc. (NASDAQ:PYPL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 89 hedge fund portfolios held PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of the second quarter, compared to 92 in the previous quarter.  While we acknowledge the potential of PayPal Holdings, Inc. (NASDAQ:PYPL) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered PayPal Holdings, Inc. (NASDAQ:PYPL) and shared the list of stocks to buy according to billionaire Ray Dalio’s Bridgewater Associates. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.