Block vs. Upstart: Which Fintech Stock Has More Upside in 2025?

The fintech sector is evolving fast, driven by innovation in digital payments, credit underwriting, and user experience. Two major players — Block, Inc. XYZ and Upstart Holdings UPST — stand out for their disruptive business models and strategic growth initiatives. Block leans into a multi-vertical payments ecosystem through Square and Cash App, while Upstart is reinventing consumer lending using artificial intelligence. As both companies tackle economic headwinds and rising competition, investors are wondering which stock is better positioned for 2025. Below, we explore the merits and limitations of each to help identify the stronger long-term opportunity.

So, XYZ or UPST, which of these Fintech stocks has the greater upside potential? Let’s explore.

The Case for Block

Block continues to grow its comprehensive fintech platform, with its Square and Cash App ecosystems offering end-to-end solutions across payments, commerce, and banking. The latest innovations like the Square Point of Sale app and the rollout of “Cash App Afterpay” showcase its commitment to user-centric design and revenue diversification. 

Block’s omnichannel seller tools are helping businesses streamline operations, and its FDIC-approved lending capabilities add depth to its offerings. Cash App is also targeting younger users and families, while the Proto division is eyeing new frontiers in Bitcoin mining hardware, potentially unlocking future growth levers.

Despite these innovations, Block faces several headwinds. Macroeconomic uncertainty, including tariffs and weaker discretionary spending in categories like travel and media, is limiting Cash App Card activity. Its gross profit is forecasted to improve later in the year, but the near-term softness is noticeable. Additionally, the company is battling intense competition from PayPal, Shopify, and newer fintech upstarts. 

While Block has solid momentum and diversified revenue streams, its performance remains sensitive to shifts in consumer behavior and macro conditions, making 2025 a year that could be shaped more by external variables than internal progress.

The Case for Upstart

Upstart is gaining traction as a differentiated player in lending by replacing FICO scores with AI-driven credit modeling. Its underwriting engine, which automates 92% of loans, provides not only efficiency but also a better borrower experience. 

The company's strength lies in its expanding loan portfolio, which now includes auto loans, HELOCs, and small-dollar loans. These categories posted double-digit sequential growth in the first quarter of 2025, reinforcing the company’s operational execution and technological edge.

Upstart’s AI engine is also evolving. Model 19 introduces payment transition modeling, enhancing its ability to predict borrower behavior. These model upgrades are driving stronger conversion rates, which have risen from 14% to 19% in just a year. 

Financially, Upstart reported a 67% revenue increase year over year and flipped to profitability with a 30-cent non-GAAP EPS in Q1 2025. Even more impressive is its growing reliance on super-prime borrowers, which reduces risk and improves funding consistency. 

However, challenges remain — elevated interest rates and a dip in contribution margins are notable — but Upstart’s rapid vertical expansion, smarter underwriting, and visible operating leverage suggest a fintech stock on the cusp of durable scale.

How Do Estimates Compare for Block and Upstart?

The Zacks Consensus Estimate for Block’s 2025 sales and EPS implies year-over-year growth of 3.55% and a decline of 25.22%, respectively. EPS estimates for 2025 and 2026 have been southbound over the past 30 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

For Block:

The Zacks Consensus Estimate for Upstart’s 2025 sales implies year-over-year growth of 58.8%. What is also encouraging is that EPS estimates for 2025 have been trending northward over the past 60 days.

For Upstart:

Price Performance and Valuation of XYZ and UPST

Year to date, Upstart shares have dropped 11.4%, which is less than the 24.9% decline in the shares of Block.

XYZ and UPST Stock's Performance

Despite the price plunge, XYZ is trading at a forward 12-month Price/Sales of 1.51X, ahead of its one-year median of 1.54X. Meanwhile, UPST is presently trading at a forward 12-month Price/Sales of 4.56X, at a premium to XYZ, but below its one-year median of 5.25X.

XYZ and UPST Valuation

Conclusion

While Block has a proven ecosystem and deep roots in payments, its near-term trajectory is hindered by soft consumer demand and intense competition. Upstart, on the other hand, is showing clearer operating leverage and expanding intelligently into new credit categories with improving AI and funding structures. With strong revenue momentum and rising profitability, Upstart emerges as the fintech with greater upside potential in 2025 for long-term investors seeking innovation-led growth.

Currently, Upstart has a Zacks Rank #3 (Hold), making the stock a stronger pick compared with Block, which has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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This article originally published on Zacks Investment Research (zacks.com).

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