Is Block (XYZ) Best-Positioned to Win Wall Street’s Great Fintech Race for Dominance in 2025?

Not long after the new year got underway, Raymond James analyst John Davison upgraded Block (NYSE: XYZ) to an ‘outperform’ rating, citing the positive merchant GPV outlook for the fintech giant for the year.

Block can also count on the faith of leading Wall Street investors like Cathie Wood, whose Ark Investment Management held a stake worth $444.7 million in the stock in Q3 2024.

Wood, who’s long prioritized leading tech innovators focused on emerging technologies, has been a long-time admirer of Block and would be hoping that the stock recaptures some of its lost momentum since being impacted by widespread tech stock sell-offs in 2021 and 2022.

Despite trading lower than its 2021 peaks, Block still enjoyed growth of 33% in 2024, outpacing the likes of the wider S&P 500 index in the process.

But does Block have the potential to surpass the dominance of PayPal (NASDAQ: PYPL) to become Wall Street’s leading fintech firm in 2025? Let’s take a closer look at a stock with big ambitions for the coming months:

The Shifting Fintech Landscape

Crucially, Bernstein analysts named Block as their ‘new best idea’ for 2025 and cited a range of fundamental and clearing macroeconomic conditions that are set to steer the stock higher in the near future.

Highlighting catalysts like accelerated growth in Square’s Gross Payment Volume (GPV) and efficiency gains leveraging as much as 30% EBITDA growth, analysts have highlighted Block has a stock with plenty of room to rally.

Bernstein also noted that the lower regulatory scrutiny of the Trump administration and the prospective future inclusion into the S&P 500 index could propel the stock further in 2025.

Given that Trump’s second term has been punctuated so far by a commitment to reregulation, Block may be well-positioned to rapidly expand its suite of tools and services to users across areas like investing, cryptocurrency adoption, lending, and other high-potential areas of focus.

Block’s conscious shift towards Bitcoin mining in recent months is another tactical move by CEO Jack Dorsey, who was quick to identify opportunities by the prospect of a more crypto-friendly President entering the White House.

Clearing economic conditions can also play a key role in accelerating the user growth of Block’s flagship Cash App product, which has 57 active users at present.

According to a recent survey, the number of Americans who are nervous about investing fell from 46% in 2023 to 37% in 2024, opening the door to wider retail interest in the stocks and shares investments offered by Cash App.

Given that 66% of British adults are nervous about investing, Cash App’s withdrawal from the UK and renewed focus on US markets could be a key driver of growth for the platform.

“Reinventing Banking”

Jack Dorsey has identified Block’s Cash App as a key fintech innovation that forms an intersection of financial services, community-based P2P transactions, and commerce and has suggested that the company wants to unite all three to ‘reinvent banking’ for its customers.

One of fintech’s biggest innovations of the decade will come in the form of open finance, which is set to unite a vast array of traditional and digital financial services into a single accessible platform, and Dorsey’s vision for Cash App may well be the closest product we have to facilitate a future transition into an open finance landscape.

With the ability to unite peer-to-peer services with a tangible card that can be used at ATMs and a platform for investing in digital assets like cryptocurrency or stocks, it’s clear that Cash App can bring unprecedented convenience to individuals whether they’re investors or simply seeking financial management tools.

At this stage, it’s important to highlight that Cash App has been in no way flawless, and the seismic $255 million fine that Block has been ordered to pay by financial regulators for perceived security failings on the platform highlights that there’s a long way to go before Cash App is a fully-fledged open finance tool for the future. However, it’s clear that there’s a concerted effort to make Cash App a fintech powerhouse that could drive Block’s Wall Street credentials higher in 2025.

AI to Secure Growth

The widespread utilization of artificial intelligence throughout Block’s operations is likely to help sustain the stock’s growth into 2025 also, and actively enhance the seller experience through features like Square Online’s themes and AI-generated product descriptions in Square for Retail, which can be a transformative improvement in driving merchant engagement with customers.

Block’s accommodation of generative AI tools can also help to streamline operations and speed up workflows, with Dorsey claiming that the technology will form a critical role in the company’s present and future strategies.

Dorsey has also suggested that AI will speed up Block’s ability to innovate faster and build a creative edge.

Cautious Optimism for the Future

Because the fintech landscape is growing and maturing at a rapid pace, Block’s biggest challenges to market dominance in 2025 will be the emergence of new competitors or cutting-edge innovation pipelines among its biggest rivals.

However, CEO Jack Dorsey has shown time and again that he’s capable of adapting well to changing fiscal conditions, and his quick decision to prioritize Bitcoin mining technology off the back of Trump’s election win points to a leadership that’s skilled at discovering new opportunities at a faster pace.

2025 will be a major year for fintech as a whole, and there may be no better market player to take advantage than Block.