We recently compiled a list of 20 fintech stocks that are riding the AI wave. In this article, we’ll take a look at how Affirm Holdings, Inc. (NASDAQ:AFRM) stands compared to other fintech stocks.
Artificial intelligence (AI) is redefining the way financial services operate, ushering in a new wave of innovation while enhancing efficiency and decision-making across the sector. From automating routine processes to personalizing customer experiences, AI is firmly establishing itself as a game-changer, and nowhere is this more evident than in fintech. In recent years, the rise of generative AI (GenAI) models like OpenAI’s GPT has accelerated this transformation. These tools don’t just process data, they generate meaningful content, automate workflows, and derive insights in ways that traditional AI could never achieve.
Banks and financial institutions around the world have been early adopters of AI, not just as a passing trend, but as a strategic necessity. Many of the world’s largest banks, especially those in North America, are allocating significant resources to building AI infrastructure and talent. They are investing heavily in areas such as fraud detection, customer service chatbots, and personalized financial products. The introduction of specialized hardware further emphasizes our commitment to process improvement, risk management, and expanding innovation with AI. These investments are already paying off, leading to more efficient operations, increased profitability, and improved customer satisfaction.
The impact of GenAI extends beyond operational efficiency, impacting nearly every aspect of banking operations. Whether it’s speeding up loan applications, optimizing compliance procedures, or creating predictive investment strategies, AI is enabling financial institutions to meet ever-increasing customer expectations. Banks are also leveraging AI to stay ahead of the curve by competing with technology giants and emerging business models such as embedded finance, where financial services are seamlessly integrated into non-financial platforms.
The benefits of AI are not limited to banks. Its ripple effects extend to other areas of finance, such as asset management, insurance, and payment solutions. AI tools are transforming the way these sectors operate by providing real-time insights, personalized recommendations, and automated claims processing. For example, AI-powered financial advisory platforms are enabling wealth managers to provide tailored advice more efficiently. Similarly, insurance companies are using AI to streamline claims processing and improve both the customer experience and internal operations.
story continues
However, the rapid adoption of AI is not without its challenges. Integrating AI into financial services introduces complexities such as “black box” issues that make it difficult to interpret the logic behind AI decisions. There are also concerns about algorithmic bias, data privacy, and potential attrition. To address these issues, financial institutions are working to create robust governance frameworks that ensure transparency, fairness, and accountability in their AI operations. Banks are not just deploying AI for its own sake, they are also focusing on developing ethical AI solutions that meet regulatory requirements and maintain trust with customers.
The impact of AI is also reshaping the fintech cybersecurity landscape. While AI strengthens defenses by detecting threats and automating responses, it also increases the attack surface and creates new vulnerabilities that malicious actors can exploit. Financial institutions must strike a careful balance between deploying AI to improve security while ensuring these systems are protected from manipulation. Collaborative efforts between banks, technology companies, and regulators are essential to building a secure AI ecosystem that minimizes risk without sacrificing innovation.
According to KPMG, global fintech investments reached $51.9 billion in 2,255 deals in the first half of 2024, down from $62.3 billion in the second half of 2023. The Americas had the most investment at $36 billion, with Europe, the Middle East, and Africa (EMEA) also seeing investment. decrease to $11.4 billion. Meanwhile, the Asia Pacific (ASPAC) region secured $3.7 billion. Despite the slight drop, M&A activity showed promise, recording $32.6 billion, already exceeding the 2023 total of $58.8 billion.
The payments sector remains dominant, attracting $21.4 billion, driven by large acquisitions. AI-focused fintechs are also thriving, particularly in the US, with deals such as Ramp and FundGuard securing large funding rounds. Investors are increasingly attracted to AI-powered solutions, behavioral intelligence, and new markets in Southeast Asia and Africa.
Although high interest rates are slowing down some large deals, areas such as central bank digital currencies (CBDCs) and ESG fintech are likely to gain renewed attention in the second half of 2024, creating future growth opportunities. suggests.
In this evolving landscape, fintech companies are at the forefront of leveraging the potential of AI to transform financial services. The fintech sector is riding a wave of momentum toward new growth and opportunities, as AI technology becomes embedded in everything from fraud prevention systems to investment platforms. Companies that effectively integrate AI not only improve internal efficiency, but also generate new revenue streams and build stronger customer relationships.
In this article, we highlight 20 fintech stocks that are leveraging the AI revolution and riding the wave of innovation to new heights. As AI becomes more integral to financial services, these companies are in a position to take the lead in shaping the future of the industry, which is more efficient, secure and customer-centric than ever before. Whether you’re an investor looking to get exposure to cutting-edge technology or just curious about the future of finance, these fintech companies are worth your attention.
our methodology
In this article, we have selected 20 fintech stocks that are making big moves based on the latest news. For each company, we mentioned the number of hedge fund investors. This is taken from Insider Monkey’s Q2 database of 912 hedge funds. Why are hedge funds interested in the stocks they invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Entrepreneur confidently and happily launching a new brand on the company’s platform.
Affirm Holdings, Inc. (NASDAQ:AFRM)
Number of hedge fund holders: 34 people
Affirm Holdings, Inc. (NASDAQ:AFRM) is a leading fintech company providing innovative payment solutions in the United States, Canada, and internationally. Its platform allows consumers to make point-of-sale purchases with flexible payment options, while also offering merchant commerce solutions and consumer-centric apps. Affirm Holdings, Inc. (NASDAQ:AFRM) is classified as a FinTech leader due to its ability to integrate cutting-edge financial technologies that facilitate easier transactions and provide convenient financing options for consumers. is. Lately, the company has focused on leveraging AI-driven advances, putting it at the forefront of fintech companies riding the AI wave.
One of Affirm Holdings, Inc.’s (NASDAQ:AFRM) most notable AI-related developments is its partnership with Apple Wallet, which launched in mid-September. This integration allows us to leverage Apple Pay’s high-income user base and align Affirm with more affluent and tech-savvy consumers. Affirm Holdings’ (NASDAQ:AFRM) strategic use of AI-powered payments technology, along with its robust underwriting capabilities, will allow the company to more efficiently scale its business and customize services for its customers. It will look like this. Morgan Stanley analysts raise Affirm’s rating from “underweight” to “equal weight” and raise their price target from $20 to $37, citing the company’s AI-driven efforts as a key growth driver. I pulled it up. Analysts believe the company’s partnership with Apple could increase trading volume by $2 billion by FY26, significantly more than previously expected.
Affirm Holdings (NASDAQ:AFRM) is focused on attracting high-net-worth clients and focuses on offering 0% promotional financing and low interest rates. These services are powered by advanced AI algorithms that analyze consumer behavior and finances, allowing the company to offer more competitive pricing. The shift toward appealing to higher-income consumers is expected to increase engagement and further Affirm’s growth trajectory. Additionally, regulatory pressures in the buy now, pay later (BNPL) space have eased, giving Affirm a clearer regulatory environment and allowing it to focus on its strategic initiatives.
In its recent earnings call, the company reiterated its technological focus, including advances in AI, to optimize both the consumer experience and merchant partnerships. As Affirm Holdings, Inc. (NASDAQ:AFRM) leverages AI to improve its operations and scale, analysts expect further upside, especially on its next earnings report in November. Further developments may emerge.
Overall, AFRM ranks 15th on our list of fintech stocks riding the AI wave. While we acknowledge the potential of AFRM as an investment, we believe that some AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks that are more promising than AFRM but are trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
