Should You Hold Onto XYZ Stock in 2025 Beyond Its 19% QTD Growth?
Block 's (XYZ) solid 19.8% quarter-to-date (QTD) return has left many investors questioning whether it remains attractively valued or if a better entry opportunity lies ahead. XYZ stock has not only outpaced its peers, such as PayPal Holdings, Inc. PYPL and Shopify Inc. SHOP, but also outperformed the S&P 500 composite over the same time frame. QTD, PayPal shares have gained 12.1%, while Shopify shares have appreciated 17%.
There has been a spate of positive news of late for Block, including the launch of Square Handheld in the United Kingdom, the official partnership of Square and Live Nation Canada for extension of seamless commerce to Rogers Stadium and beyond, teaming up of Cash App and WNBA All-Star Angel Reese as well as its partnership with Bambu Dessert Drinks to streamline and centralize operations.
However, the question arises whether these developments are sufficient to keep the momentum, or a challenging macroeconomic environment can jeopardize XYZ's growth tempo. So, here we make a detailed analysis of XYZ to conclude whether it will be prudent enough to hold the stock for now, or accumulate more shares, or discard and book profits.
What's Driving Block Stock's Performance?
Block is building a powerful fintech ecosystem through its dual growth engines, Square and Cash App. These platforms offer comprehensive solutions that span payments, commerce, banking, and lending, positioning Block as a one-stop provider for both consumers and businesses. The latest innovations like the Square Point of Sale app and the rollout of 'Cash App Afterpay' showcase its commitment to user-centric design and revenue diversification.
Square is steadily reclaiming market share, supported by a 9% year-over-year increase in gross profit and an 8.2% rise in gross payment volume on a constant currency basis. These gains highlight Block's successful execution on product innovation and its targeted go-to-market approach, which includes expanding field sales, onboarding larger sellers, and deepening strategic partnerships.
Despite shifting spending patterns, Cash App is poised for meaningful network expansion. Block is prioritizing user growth among teens and families, while accelerating the rollout of Cash App Borrow following FDIC approval for nationwide lending — a move that's expected to significantly expand eligibility and enhance unit economics beginning in the third quarter of 2025.
At the same time, Block is tapping into new revenue opportunities. The 'Cash App Afterpay,' a retroactive buy-now-pay-later product, launched earlier this year, is already showing strong early adoption. Additionally, Block's Proto division is preparing to enter the Bitcoin mining space, with plans to release custom chips and systems in the second half of 2025, a strategic push into the broader digital asset infrastructure market.
What Hinders Block's Progress?
Although Block continues to roll out new features and expand its ecosystem, it faces several challenges. Economic headwinds, such as trade tariffs and subdued discretionary spending in areas like travel and media, are dampening activity on the Cash App Card. Its gross profit is forecasted to improve later in the year, but the near-term softness is noticeable. Moreover, the company is contending with stiff competition from established players like PayPal and Shopify, as well as a growing wave of fintech disruptors.
Despite its broad-based growth and diverse revenue streams, Block's performance remains vulnerable to macroeconomic fluctuations and changes in consumer spending patterns. As a result, external forces may play a larger role than internal execution in shaping its trajectory in 2025.
XYZ's Earnings Estimates Revision Trends Southward
The Zacks Consensus Estimate for Block's 2025 sales and EPS implies year-over-year growth of 3.5% and a decline of 27%, respectively. EPS estimates for 2025 and 2026 have been southbound over the past 30 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
XYZ Shares Trade at a Premium
Block shares are overvalued, as suggested by the Value Score of D.
In terms of forward 12-month Price/Earnings (P/E), Block is trading at 22.17X compared with PayPal's 13.66X.
Final Take on Block
Block continues to strengthen its position as a leading fintech innovator through its expanding Square and Cash App ecosystems. Recent partnerships, product rollouts, and innovation across Square and Cash App highlight the company's strong execution and growing ecosystem. Initiatives like Cash App Borrow, Afterpay integration, and expansion into Bitcoin mining signal long-term potential.
While macroeconomic uncertainty and premium valuation raise caution, Block's diversified revenue base, user growth strategies, and continued momentum justify holding the stock. For now, maintaining a position in XYZ seems prudent as it navigates challenges while unlocking new growth avenues.
At present, Block carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Picks Stock Most Likely to "At Least Double"
Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.
See Our Top Stock to Double (Plus 4 Runners Up) >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Block, Inc. (XYZ): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Shopify Inc. (SHOP): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
an hour ago
- Globe and Mail
Should You Forget SoundHound AI and Buy 2 Artificial Intelligence (AI) Stocks Right Now?
SoundHound AI (NASDAQ: SOUN), a developer of artificial intelligence (AI)-powered speech and audio recognition tools, has been a polarizing investment ever since its public debut three years ago. The bulls were initially impressed by its rapid growth, expanding customer base, and the disruptive potential of its tools, which could be customized for restaurants, vehicles, consumer electronics, and other markets. Nvidia 's minor investment in the company raised even more green flags. However, a lot of SoundHound's growth was driven by its acquisitions rather than its organic improvements -- and it remained deeply unprofitable. It also faces stiff competition from similar voice recognition platforms, and many investors fled after Nvidia sold its entire stake earlier this year. From 2024 to 2027, analysts expect SoundHound's revenue to increase at a compound annual growth rate (CAGR) of 48%. They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive by the final year. That's a promising growth trajectory, but it's still richly valued at 20 times this year's sales, so any bad news could easily sink its stock. Instead of investing in SoundHound AI, it might be smarter to invest in two other AI-oriented stocks that are on firmer ground: Arista Networks (NYSE: ANET) and Micron (NASDAQ: MU). 1. Arista Networks Arista Networks is a top networking hardware and software company. But unlike its larger competitor, Cisco, which locks in its customers with proprietary hardware and software, Arista uses off-the-shelf chips and open-source software that are compatible with a broad range of hardware. It also sells low-latency switches, optimized for hyperscale data center and cloud networks, and its CloudVision platform enables those clients to easily monitor their own cloud deployments. Arista's flexible, modular, and scalable strategy made it a top choice for cloud giants like Meta Platforms and Microsoft. So, while Cisco might be a better one-stop shop for enterprise and campus customers, Arista is a more focused play on the booming cloud and AI infrastructure markets. From 2019 to 2024, Arista's revenue rose at a CAGR of 24%, while its adjusted net income increased at a CAGR of 30%. From 2024 to 2027, analysts expect its revenue and earnings per share (EPS) to grow at a CAGR of 19% and 15%, respectively. That growth should be driven by the soaring need for cloud and AI infrastructure upgrades, its gradual expansion into the enterprise and campus markets to challenge Cisco, and the rising adoption of its integrated security services. Arista's stock isn't cheap at 39 times this year's earnings, but it could still have plenty of room to grow. 2. Micron Micron is one of the world's largest producers of DRAM (dynamic random-access memory) and NAND memory chips. It controls smaller slices of both markets than South Korea's Samsung and SK Hynix, but Micron manufactures slightly denser DRAM chips with its 1-beta process. That technological edge makes it a top choice for performance-oriented cloud and AI companies. Micron is a cyclical company that follows the memory market's boom and bust cycles. Its last bust occurred in 2023, when the PC market lapped its pandemic-driven acceleration, the 5G smartphone upgrade cycle cooled, and more data centers prioritized their purchases of Nvidia's AI-oriented graphics processing units (GPUs) over new memory chips. But from fiscal 2024 (which ended last August) to fiscal 2027, analysts expect Micron's revenue and EPS to grow at a CAGR of 23% and 148%, respectively. The company's growth is accelerating again as the PC and smartphone markets stabilize and more data center customers install solid-state drives (SSDs) and high-bandwidth memory (HBM) chips to support the latest cloud and AI applications. That's an impressive growth trajectory for a stock that trades at just 13 times next year's earnings. Micron is likely trading at that lower valuation because it's a cyclical stock. However, it still has plenty of upside potential in this boom cycle as the cloud and AI markets generate fresh tailwinds for its business. Should you invest $1,000 in SoundHound AI right now? Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $704,676!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $950,198!* Now, it's worth noting Stock Advisor 's total average return is1,048% — a market-crushing outperformance compared to175%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025
Globe and Mail
an hour ago
- Globe and Mail
These Are the Best Stocks You Can Buy With $1,000 Right Now
The stock market has recovered nearly all the losses that were sparked by fear of a new trade war. The benchmark S&P 500 index finished June 25 less than a percentage point below its all-time high. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Despite a big recovery for the overall stock market, several top tech stocks with a hand in the artificial intelligence (AI) revolution have been trading for attractive valuations. Demand for AI-related products hasn't translated into profits for the most popular large language model (LLM) providers, but sales of semiconductors and equipment required to produce those LLMs keep surging. Lately, Nvidia (NASDAQ: NVDA), Lam Research (NASDAQ: LRCX), and ASML Holding (NASDAQ: ASML) have been trading at attractive valuations. If you have $1,000 -- or any amount -- available to invest in these stocks now, there's a good chance you'll realize market-beating gains over the long run. 1. Nvidia If you follow the AI space, you probably heard that DeepSeek in China ignored CUDA, Nvidia's software development kit (SDK), to produce a competitive LLM using inferior graphics processing units (GPUs). The important thing for everyday investors to take from this event is that the vast majority of AI application developers aren't as capable and all but a handful of developers still rely on CUDA to build AI applications. Nvidia's software advantage allowed its fiscal first-quarter sales to surge 69% year over year to a whopping $44.1 billion. With demand for AI computing on the rise, and a software advantage that keeps competitors at bay, several more years of rapid growth isn't a wild expectation. On the surface, Nvidia stock looks expensive at 36 times earnings expectations. But once you consider how fast earnings are growing, the stock actually looks like a bargain right now. The forward price/earnings-to-growth (PEG) ratio divides the trailing price-to-earnings ratio by the rate of earnings growth Wall Street expects in the year ahead. Anything below a 1.0 is considered undervalued, so Nvidia's recent forward PEG of 0.79 suggests now is a good time to buy. 2. Lam Research AMD and Intel are furiously trying to overcome Nvidia's software advantage. But even if they succeed, they'll still likely employ advanced etch and deposition equipment from Lam Research, a leader in the space. Now that advanced semiconductors are spacing nodes just a few nanometers apart, stacking semiconductor components is the way forward. As a leader in the verticalization processes, Lam Research could remain a vital equipment provider in the decade ahead. Its equipment is used to manufacture high bandwidth memory (HBM), which is an increasingly important component of AI processing. Strong demand from Nvidia helped Lam Research report first-quarter earnings that rose 12% year over year. Even if Nvidia unexpectedly loses its software advantage in the years ahead, the next leader in the semiconductor space will likely employ Lam's etch and deposition equipment to produce HBM, too. Shares of Lam Research have been trading for just 24 times earnings estimates. This valuation is extremely low for a highly profitable company that could continue raising earnings at double-digit percentages for many years to come. 3. ASML Holding With $1,000, you could buy many shares of Nvidia or Lam Research. Advanced lithography system producer, ASML Holding is more than 25% off its previous peak, but you'll need at least $815 to buy one share at recent prices. (Don't get hung up on price, though. Price and value aren't the same thing, and fractional shares are available.) Like Lam Research, ASML is a niche producer of semiconductor manufacturing equipment. Its enormous lithography machines contain hundreds of thousands of components and require months to ship and assemble. When it comes to advanced chips that AI applications rely on, an ASML lithography machine is the only option. ASML's already entrenched business requires heaps of capital, engineering knowledge, and relationships with semiconductor manufacturers. These sustainable advantages allowed earnings per share to rise by 16% annually over the past five years, and the gains could continue. At the midpoint of management's guided range, top-line sales are expected to climb by 14.8% this year. Without any competitors capable of marketing similar equipment, continued growth at a double-digit annual percentage seems likely. A stock market aware of ASML's competitive position rarely allows its stock price to fall into deep value territory. At recent prices, it's been trading for about 30 times forward-looking earnings expectations. This is a steep valuation, but it isn't one that ASML can't grow into. Adding some shares to a diversified portfolio to hold over the long run looks like a smart move for most growth-oriented investors right now. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $704,676!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $950,198!* Now, it's worth noting Stock Advisor 's total average return is1,048% — a market-crushing outperformance compared to175%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Intel, Lam Research, and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.
CBC
2 hours ago
- CBC
City warns of surge in homeless population by 2035
A city report says that Ottawa's homeless population could surge by almost 60 per cent over the next decade without substantial investments in affordable housing. The city released its housing needs assessment on Friday. Its modelling estimates that, under a business-as-usual scenario, Ottawa could have a total of 14,734 people experiencing homelessness annually by 2035. That's up from 9,326 currently. Those figures represent people who enter a homeless shelter at any time during the year, rather than the number of people who are homeless at a specific point in time. The point-in-time number, collected every four years through a citywide count, reached 2,952 in October 2024 — 78.5 per cent higher than in 2018. Friday's report lays out the pressures that are driving people into homelessness. The city's population is growing, and more of those people are from vulnerable groups like renters, single parents and fixed-income seniors. Housing costs are growing faster than wages, creating an affordability gap. The waiting list for rent-geared-to-income units has swelled beyond 15,000, leaving people waiting years for affordable housing. "These are provincial and national trends, and they're going to intensify," said Jesse Donaldson, executive vice president of HelpSeeker Technologies, which performed the modelling for the city. "The extent to which the housing pressures will continue and escalate over the coming years — next year, five, 10 years — is so significant that it requires a proportional response." City needs help to fund thousands of housing units To keep up with those pressures, the report estimates that the city will have to add almost 129,000 new housing units over the next decade. More than 10,550 of those units should be affordable, provided through a combination of supportive, transitional and public housing, as well as rent subsidies. If that happens, the model predicts that people would exit homelessness more quickly than others would lose housing, so the number of homeless people would eventually drop to near zero. The city does not have an estimate of how much that will cost. That will come later, through an update to the city's 10-year housing and homelessness plan. But Kale Brown, the city's interim director of housing and homelessness services, said the figure is sufficiently high that there's little chance the city can handle the cost on its own. "We would certainly need more sustained and significant funding from senior levels of government," he said. The federal government has already pledged $176 million to Ottawa over three years through its housing accelerator fund. Brown said the cost of not acting — and adding thousands of homeless people to shelters or encampments — is far greater. "We would anticipate much larger costs on emergency services, hospital services, that kind of thing," he said. "It is imperative that we do the cheaper solution over the long term." The report draws from a long list of data sources, including the city's point-in-time count of the homeless population, as well as statistics from the Canada Mortgage and Housing Corporation and the census. Here are some of the key data points and findings for Ottawa: Ottawa is projected to have about 118,000 more households by 2035. Renters are expected to make up about 43 per cent of all households by 2035, up from about 36 per cent in 2021. The median monthly rent has increased 61.3 per cent from 2014 to 2024. Household incomes have grown more slowly, rising 46.4 per cent from 2006 to 2021. The percentage of renter households paying $2,000 or more per month increased from 1.3 per cent in 2006 to 17.1 per cent in 2021. 23 per cent of renter households live in housing that is unaffordable, unsuitable or inadequate. The vacancy rate for affordable rental units is substantially lower than high-rent housing; for units affordable to the lowest income households, the rate is effectively zero. Social assistance rates remain far below market rents. The waiting list of rent-geared-to-income housing has grown 36.8 per cent from 2022 to 2024, reaching 15,140 households in December 2024. The average wait varies between 4.2 years and 7.6 years, depending on the number of people in the household and whether they have children.
