Block (XYZ) Builds Momentum as AI and Cash App Drive Upside

Block (XYZ) is setting up for stronger earnings growth as artificial intelligence (AI) efficiency and Cash App monetization improve, which, in my view, investors still do not fully appreciate. While the company spans consumer finance, merchant software, and lending, the stock has remained down about 22% over the past six months despite early signs of momentum. As Square stabilizes and AI accelerates execution, the current setup still leaves room for upside, keeping me bullish on XYZ. 

Cash App Looks Stronger than the Market Gives It Credit for

Cash App remains the centerpiece of the bull case. In the latest quarter, Cash App gross profit grew 33% year-over-year to $1.83 billion, well ahead of expectations. Monthly transacting actives reached 59 million, and primary banking actives climbed to 9.3 million, up about 22% year-over-year. Those are important numbers because they show Cash App is becoming more than just a peer-to-peer payments tool. The app has also recently introduced a pay-later option.

The company is increasingly layering in financial services that deepen engagement and raise monetization. Borrow, an optional short-term lending tool inside Cash App, is a major part of that story. Block said Borrow is now available in almost all U.S. states, and origination volume grew more than three times year-over-year. Management also noted that returning borrowers can qualify for larger loan amounts at lower risk to Block, which should support both growth and credit performance over time.

What I find especially encouraging is that Block says Cash App has historically held up well under inflationary pressure, and today it has more tools to help users smooth cash flow than it did during prior periods of stress. That matters because a lot of Block’s user base overlaps with consumers most sensitive to inflation and fuel costs. If the company can keep those users engaged while cross-selling more financial products, gross profit growth could remain stronger than investors expect.

Square Is Improving, Setup Better than Expected

Square is not growing as fast as Cash App, but it does seem to be gaining traction again. In the latest quarter, Square’s gross payment volume (GPV) rose about 10%, while international GPV grew around 25% in constant currency. Management also said quarter-to-date trends through late February showed Square GPV growth accelerating above 11%, with international growth above 26%.

The more important piece is the new volume added (NVA). Square posted its strongest NVA growth, which suggests the go-to-market strategy is working. Management highlighted field sales, partnerships, and independent sales organization (ISO) channels as contributors. It ended the year with 140 field sales representatives, and major partners such as Sysco (SYY) and US Foods (USFD) were driving roughly half of inbound sales leads.

That matters because Square’s opportunity has always been larger than just small merchants swiping cards. The company wants to move upmarket, expand internationally, and attach more software and services to payments. That should help gross profit growth more closely track payment volume growth, especially in the second half of 2026.

AI Is Not Just a Buzzword Here

This may be the most underappreciated part of the story. Block’s recent workforce reset drew a lot of attention, but management has been clear that it was not simply a cost-cutting move. It was about product velocity and reorganizing the business around what AI can now do. The company said its internal AI harness, called Goose, has accelerated developer velocity, with engineers reporting 8–10 hours saved weekly, aiding execution across Cash App and Square.

Management believes AI can improve the company across three fronts: software development, internal workflows, and customer-facing products. If engineers become materially more productive, Block should be able to ship products faster, test more ideas, and do it with smaller teams. That is a big deal for a company that has historically had exciting ideas but sometimes uneven execution.

Could there be a disruption risk from such a major reorganization? Of course. That is the main bear argument. However, I think the early evidence suggests the company is becoming leaner and more focused, not weaker.

Intrinsic Value Suggests Meaningful Upside

Using a blend of 12 valuation methods, including P/E, EV/EBITDA, and a 10-year discounted cash flow (DCF), I estimate Block’s fair value at around $80 per share, implying roughly 31% upside from current levels. 

This assumes continued Cash App strength, improving Square trends, and modest margin expansion driven by AI efficiencies.

Wall Street Backs the Bull Case

According to TipRanks, the average rating on XYZ is Strong Buy, with 27 Buy, two Hold, and one Sell ratings. Based on 30 Wall Street analysts offering 12-month price targets for Block, the average target is $84.31, implying about 34.19% upside from the last price of $62.83.

Conclusion

I am bullish on Block because I think the market is still underestimating two things: how much stronger Cash App has become as a financial services platform, and how much AI could improve Block’s execution and cost structure.

Cash App is adding more engaged users, more primary banking relationships, and higher-value products like Borrow. Square is regaining momentum through better go-to-market execution and international growth. Also, AI is no longer just a future concept at Block; it is already improving developer speed and product delivery in measurable ways.

Yes, there is execution risk, especially after such a large organizational reset. However, with improving core trends, raised guidance, and valuation work that still points to meaningful upside, I think XYZ looks like an attractive opportunity from here.