BuccoCapital Bloke
Technology & Markets Writer for Educated Guess
Visa and Mastercard, as AI losers, can do nothing to change the narrative except accelerate. Unless sentiment shifts, AI progress stops or the paradigm changes, it is accelerate or die. Markets may eventually adjust if such vulnerable businesses stay unimpacted, but that may take several years. x.com x.com x.com x.comÂ
Visa's roughly 30x earnings multiple and $750 billion valuation leave less upside than other opportunities, even if it keeps executing; the best case may be another doubling over a few years. Its once-impenetrable moat may look different in five years, while its reputation as a safe compounder is already priced in. This is a relative judgment, not a prediction that Visa cannot keep rising. x.com x.com x.com x.com x.comÂ
American Express looks set for a laggard catch-up trade: it sits near a bear market while Mastercard and Visa are at all-time highs, despite historically tracking them on weekly and especially monthly bases. It is Berkshire Hathaway's second-biggest holding after Apple. The setup resembles Ferrari, a high-end consumer name that stalled and then turned around out of nowhere. x.comÂ
Mastercard may be the only scaled, capital-light network benefiting from AI, with bloated technical debt uniquely addressable by coding tools. Nominal inflation-linked recurring revenues and hardware attach add to the case at low-teens free-cash-flow yields. While payments getting bid in a red market probably signals the rally is over, these traits could mean it is not. x.comÂ
S&P Global, Mastercard, Visa, Moody's and Berkshire Hathaway have turned from portfolio ballast into funding shorts. These EPS compounders once pulled portfolios up alongside spicier longs, but they are never particularly cheap, Visa may rise only 4-5% on great earnings, and they can't be taken out. For most investors' horizons they are irrelevant next to momentum stocks that gap up 30% on narratives, so owning them now means being long funding shorts. That could change. x.com x.comÂ
Card networks like Visa and Mastercard and percentage-fee processors like PayPal face long-term disruption markets aren't pricing in, as AI agent payments settle in stablecoins. Per Circle's global markets head, AI agents completed 140 million payments worth $43 million in nine months, 98.6% settled in USDC, averaging $0.31. Visa and Mastercard won't disappear, but fee-free rails and USDC may cannibalize most of their future growth, while the market assumes Visa compounds forever. x.com x.comÂ
Visa owns the payment rails that AI agents would use, so agentic commerce strengthens rather than replaces it. The stock rose about 9% as the market realized AI agents are not replacing Visa's global network, per @StockSavvyShay. Visa is one of the best businesses of all time, and price eventually follows fundamentals. x.com x.comÂ
Tech stocks will get wrecked when AI merely opens new avenues for productivity without dramatic change, since AI bulls are selling a pie-in-the-sky superintelligence story. That modest outcome, raised by @UrInsideMan, is what will actually happen. x.comÂ
Visa and Mastercard stand to benefit as AI agents begin searching and buying on users' behalf through their payment networks. Per @EhrmantrautCap_, Qualcomm is teaming with Google and Mastercard to build agentic AI from search to payment. That points to armies of agents searching thousands of websites and markets with autonomy to transact over Mastercard, and Visa will likely sign similar collaborations. Their joining agentic commerce is giga bullish for the duopoly. x.com x.comÂ
Visa and Mastercard are priced for a disruption that looks overdone, leaving two of the best compounders at decade-low multiples. Mastercard trades 34% below its 10-year median P/E, and Visa is similar. Stablecoins are about 2% of Visa's volume and years from replacing daily card use. The Credit Card Competition Act could cut fees from about 1.8-2.0% to 1.25%, with $10 billion-plus of industry revenue at stake, but analysts put its passage odds at 30-40%. x.comÂ
Visa and Mastercard remain amazing businesses whose vast data should make AI-era growth drivers very promising. Account-to-account payments are seen as the main threat, but the five-party card network will be very hard to replace: consumers and banks like cards, A2A struggles abroad, and the networks are tackling A2A fraud, so the two should coexist. The real bear case is Apple building its own payment infrastructure to bypass them, which its hardware control makes possible. x.comÂ
