PayPal Lifts Profit Outlook Following Strategic Partnership With OpenAI

PayPal Holdings Inc. boosted its full-year earnings outlook and unveiled a partnership with OpenAI to integrate its digital wallet into ChatGPT a move that sent its stock soaring in early New York trading.

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With consumer spending holding steady, the payments giant raised its 2025 adjusted earnings-per-share forecast to a range of $5.35 to $5.39, up from its previous estimate of $5.15 to $5.30 issued in July. In addition, PayPal introduced a new dividend program, pledging to pay 14 cents per share for the current quarter.

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“This is a stronger company today than we were two years ago,” said Chief Executive Officer Alex Chriss in a statement on Tuesday. “With unique competitive advantages, a clear strategic vision, and growing operational momentum, we believe PayPal is exceptionally positioned for future success.”

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Shares of the company which had fallen nearly 18% this year through Monday surged 14% in early trading following the announcements.

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The tie-up with OpenAI represents a major step in PayPal’s ongoing effort to embed its services more deeply into emerging technologies. With hundreds of millions of ChatGPT users already using the AI tool to search for products, this integration will allow PayPal to provide the payment infrastructure that seamlessly turns those searches into completed transactions.

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The partnership strengthens PayPal’s position at the intersection of digital payments and artificial intelligence, opening new growth avenues as AI-driven commerce continues to evolve.

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In its third-quarter results, PayPal reported transaction and credit losses of $483 million, slightly above analysts’ projections of $479 million and marking a 37% increase from the same period last year. Despite the rise in losses, overall performance topped Wall Street’s expectations.

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The company’s total payment volume (TPV) climbed 8% year-over-year to $458.1 billion, surpassing forecasts of $450.3 billion. Meanwhile, transaction margin dollars a key metric reflecting how much PayPal earns from processing transactions after expenses came in at $3.87 billion, showing continued operational strength.

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A key development during the quarter was PayPal’s deal with Blue Owl Capital Inc., a private credit firm that agreed to purchase roughly $7 billion worth of PayPal’s buy-now, pay-later (BNPL) loans over the next two years. The agreement underscores how the $1.7 trillion private credit market continues to expand its footprint in consumer finance.

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Under the arrangement, PayPal will continue to manage all customer-facing functions for these loans including underwriting and servicing while transferring ownership of the assets to Blue Owl. This structure allows PayPal to maintain its customer relationships and operational control without carrying the associated debt risk on its balance sheet.

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The BNPL sale marks another strategic move to streamline PayPal’s balance sheet and improve its capital flexibility. By shedding credit exposure while retaining control over user engagement, the company can focus more on scaling its digital payment network and exploring high-margin opportunities across AI, e-commerce, and financial technology.

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For CEO Alex Chriss, who took the helm in late 2023, these updates signal a new phase for PayPal. The company has been under pressure to reignite growth amid rising competition from fintech rivals like Block Inc. and Apple Pay, as well as newer entrants leveraging AI-powered tools to enhance user experience.

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The partnership with OpenAI and the strategic divestment of BNPL loans suggest that PayPal is not just defending its market position but actively reshaping its business model for the next decade. By aligning its payment infrastructure with one of the world’s most-used AI platforms, the firm is positioning itself to benefit from the rapid evolution of AI-driven commerce and digital payments.

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Investors responded positively to the latest announcements, viewing them as evidence that PayPal’s turnaround strategy is gaining traction. With solid earnings guidance, a fresh dividend, and a major AI collaboration, the company appears to be regaining investor confidence after months of underperformance.

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As the digital payments landscape continues to evolve, PayPal’s renewed focus on innovation and strategic partnerships could mark the beginning of a sustained comeback one that reestablishes the company as a leader in the rapidly converging worlds of fintech and artificial intelligence.

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