Visa Is One of the Largest Financial Companies by Market Cap. But Is It a Buy?

Annual global gross domestic product (GDP) now totals in the ballpark of $110 trillion. It's not a surprise that with so much economic activity, leading businesses dealing with anything related to financial services should also be extremely valuable. The proof is in the numbers.

There's no shortage of massive financial enterprises carrying huge market caps. For instance, Visa (NYSE: V) is currently worth a jaw-dropping $725 billion. It's without a doubt one of the largest companies on the face of the planet.

But is this stock, which has soared 36% in the past 12 months (as of June 12), a smart buy right now? Here's what investors need to know.

Image source: Getty Images.

Visa's momentum continues

Perhaps the best word to describe this year is "uncertainty." Ongoing trade negotiations have spurred fears about a recession. We saw this play out with the market tanking earlier in 2025, although it has recovered nicely. Investors are smart to think that this unfavorable economic backdrop should probably have a negative effect on companies' financial performance.

But here's where Visa stands out. During the fiscal 2025 second quarter (ended March 31), the dominant payment platform posted 9% year-over-year revenue growth. This was driven by strong cross-border volume, which has been a usual occurrence.

"Consumer spending remained resilient, even with macroeconomic uncertainty," CEO Ryan McInerney said.

This is one of the most profitable businesses. Visa's net profit margin was 48% in Q2, and in the past five years, it has averaged a stellar 52%. Running a scaled payment network is proving to be an extremely lucrative endeavor.

Looking ahead, investors have every reason to be optimistic that the growth will continue. Visa benefits from the rising adoption of digital payments, at the expense of cash and paper-based methods. And as the economy expands, so does spending activity. This all helps Visa handle more payment volume, which was $3.9 trillion in the most recent fiscal quarter.

Virtually impossible to disrupt

Just because there are massive financial businesses, it doesn't mean younger rivals can't emerge. In the past decade, fintech companies have found success by leveraging technology to offer exceptional user experiences to their customers. Just in the payments industry, PayPal, Block, Adyen, and Shopify come to mind.

You would think that these smaller businesses would make a serious dent in Visa's operations. However, this hasn't been the case. Since Visa is so ingrained in global commerce, the rise of fintech enterprises can be viewed as driving more usage of the card giant's platform. That's because they make it even easier to adopt cashless transactions.

Moreover, Visa's powerful network effect makes its competitive position virtually unassailable. The system works well for merchants, of which there are over 150 million plugged into the Visa network, and cardholders, who carry 4.8 billion Visa cards around the world. Both stakeholder groups appreciate the convenience and security Visa offers, not to mention how ubiquitous the network is.

Unless a new system pops up that's 10 times better than what's available now, I'm fairly confident Visa will not only stay relevant but will continue to lead the payments landscape well into the future.

Can Visa stock beat the market?

Shares of Visa have crushed the S&P 500 in the past decade, producing a total return of nearly 500%. But I'm not sure this outperformance will continue as we look ahead. The company's massive size gets in the way.

Valuation is another key component that investors must factor into their decision-making process. Visa stock trades at a price-to-earnings ratio of 37.4. This represents a premium to the trailing five- and 10-year averages. Investors who want huge returns should wait for a sizable pullback.

Should you invest $1,000 in Visa right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adyen, Block, PayPal, Shopify, and Visa. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.