Paypal Stock Surges 15% Amid Wallet Deal with OpenAI’s ChatGPT and Earnings Release

In a single day, PayPal Holdings, Inc. surged around 15% in pre-market trading on October 28th, 2025 as per Google Finance as markets digested two major pieces of news: a new wallet integration deal with ChatGPT from OpenAI and a strong release of its third-quarter earnings. The combination surprised investors as, on one hand, PayPal positioned itself inside a major consumer AI context; on the other, the numbers showed solid growth and margin improvement. 

Let’s break down with this blog what the deal means, how earnings looked, and why the forward story may matter for both Indian and global investors.

How PayPal and ChatGPT Came Together

The wallet-deal announcement brings PayPal into the fold of ChatGPT’s commerce ecosystem. Under the agreement, PayPal will function as a built-in payments option in ChatGPT’s “Instant Checkout” flow, meaning users interacting with ChatGPT can pay via PayPal without leaving the chat interface. That gives PayPal prime exposure at the emerging intersection of conversational AI plus commerce.

For investors, this is more than a technical link, it implies a potential shift in where transactions originate. If ChatGPT begins to suggest products and then enables payment via PayPal, this could create incremental checkout volume that did not previously occur inside PayPal’s network. The visibility and novelty of the deal triggered the initial market reaction, but deeper value hinges on execution.

Paypal’s Q3 2025 Earnings Snapshot

Source: Paypal’s Q3 Earnings Release 

PayPal released quarterly results that complemented the strategic deal. Total payment volume (TPV) rose to $458.1 billion, up roughly 8 percent YoY on a foreign-exchange neutral basis. Net revenue reached about $8.42 billion, showing approximately 7 percent growth versus the prior year. Operating income came in at $1.52 billion and net income at $1.248 billion, representing double-digit percent increases compared with the year-ago period. Diluted earnings per share hit $1.30, up about 32 percent.

These numbers suggest PayPal is regaining growth momentum while improving margins. Importantly, the company also raised its full-year adjusted earnings guidance, which signals management’s confidence in the medium-term outlook, and announced a dividend, shifting some investor focus from pure growth to return of capital.

What Analysts Were Expecting and How PayPal Measured Up

Heading into the earnings release, analysts were modelling steady revenue growth and modest profit improvement, with the key focus on higher-margin services and branded wallet monetization (especially via Venmo). The market expected PayPal to show signs of margin expansion but not necessarily a dramatic turnaround.

In reality, PayPal beat consensus on both revenue and adjusted EPS. The raised full-year guidance added a positive surprise. Combined with the ChatGPT wallet deal announcement, the market interpreted this as a meaningful inflection rather than just another decent quarter. Some analysts upgraded their ratings and price targets following the print.

Why This Matters for Investors in India and Globally

For Indian investors the move is noteworthy for several reasons. First, it underscores PayPal’s role as a global digital payments leader; Indian-origin fintechs may benchmark against it, but PayPal remains entrenched in global rails. The ChatGPT deal suggests PayPal is leap-frogging into new commerce ecosystems rather than just transacting. Second, if PayPal can convert its strategic tie-up into meaningful checkout volume and improve its take-rate (the share of revenue it keeps from transactions), then revenue growth and margins both improve, which is attractive for long-term holdings.

On a global level the story is timely. Payments is a competitive industry, but embedding wallet services inside AI-driven user flows is still nascent. PayPal appears to be staking a claim early. That gives it a potential moat and also positions it to benefit from trends in conversational commerce, AI adoption and digital wallets, all of which appeal to investors looking for growth plus structural tailwinds.

Risks and What to Watch in Coming Quarters of Paypal

Despite the upside, there are risks. User behaviour in AI-powered transactions is evolving and not guaranteed to scale quickly. Merchant adoption of Instant Checkout inside ChatGPT needs to be measured and meaningful. Competitive pressure from other wallets, fintechs and BigTech remains intense. Regulatory oversight of both payments and AI commerce may add complexity.

Investors should monitor upcoming quarters for several key metrics: 

• Growth in branded wallet usage, especially Venmo; 
• Incremental take-rates from merchant services; 
• Number of checkout transactions via ChatGPT integration; and 
• Guidance commentary on timing of revenue recognition related to the new AI commerce flows. 

These will give clues whether the newfound momentum is sustainable.

Bottom Line

The convergence of a high-visibility strategic partnership with ChatGPT and a credible earnings beat has renewed investor focus on PayPal. The stock’s surge reflects more than short-term optimism, it reflects a possible shift in narrative: from payments infrastructure to embedded AI commerce platform. 

For long-term oriented investors the development is worth watching closely. If PayPal converts the ChatGPT deal into growing checkout volume and higher margins, the current move looks less like a blip and more like an early vote of confidence in a new business phase.

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