If you believe the news, artificial intelligence (AI) is going to change everything. That may be true in some sense, but the real question is how much will it actually change. Perhaps the real story is that it will create more opportunities, since there are some things that even the fanciest computer program can't alter. This is where Visa's (V 0.87%) recent stock pullback comes in.
Visa is deeply embedded in everyday life
AI is great, but it won't change your need to eat and groom. It won't change your desire to do things, like go to the mall. And it won't change your desire to own things, like the clothes you might buy at the mall. In other words, there is still going to be a lot of money spent on the same things it's spent on right now. Visa helps make all of that spending happen.
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It operates one of the world's largest payment processing networks, competing with fellow giants like Mastercard. The core benefit Visa offers is that it ensures secure transactions when a card bearing its logo is used. That's possibly going to be even more important in a world where AI can also be used to do nefarious things. In fiscal 2025, the company handled 257.5 billion transactions, up 10% year over year, generating $40 billion in revenue. Visa only collects a small fee from every transaction, but given the number of transactions, it adds up to huge top-line figures.
Visa looks attractively valued
It seems unlikely that AI will destroy Visa's business, and in fact, it may even increase the company's opportunities. The company is already using the technology to enhance its own operations. And still, Wall Street is worried, leading to a sell-off in Visa's stock.
NYSE: V
Key Data Points
That decline has pushed Visa's price-to-sales ratio down to 16, notably below its five-year average of over 20. The price-to-earnings ratio is down to roughly 29, lower than the longer-term average of 33. And the price-to-forward earnings ratio is now at 25.5, compared to a five-year average of 27.5. If you are a growth-oriented investor, it looks like Visa is on sale right now. A $1,000 investment will buy you three shares of the stock.
Visa is cheaper, but not cheap
The problem here is that a P/E ratio of 29 is hardly cheap on an absolute basis. Value investors still won't be interested in Visa. But if you like companies that are growing quickly, Visa is still doing just that. And while Wall Street is worried about the negative impact of AI, you have an opportunity to jump aboard a company that seems to be using that technology to grow.
