Mastercard (NYSE:MA) is one of the top non-AI stocks among retail investors right now, based on our search of Reddit investing communities. But why are they buying a payment network stock while everyone else chases chips and data centers?
Why Redditors Are Buying
One Redditor summed up the appeal: even in a downturn, people keep spending, so the fee revenue keeps flowing. Another argued Mastercard isn’t cheap on an absolute basis, but it’s cheap relative to its own history. The stock trades at 27x forward earnings versus its five-year average closer to 35x.
The numbers back this up. Q1 2026 revenue grew 15.7% year over year, an acceleration from 14.2% a year earlier and up from roughly 10% growth in 2024. Full-year 2025 net revenue was up 16%. The real growth engine isn’t swipe fees, which are a mature, low-double-digit grower. It’s value-added services like fraud prevention and data analytics, now 40% of total revenue and growing near 20% a year.
Why the Moat Is Unbreakable
Mastercard’s competitive advantage comes down to network effects: every additional merchant that accepts Mastercard makes the network more valuable to cardholders, and every additional cardholder makes it more valuable to merchants. Together with Visa (NYSE:V), the two networks are accepted at more than 150 million merchant locations worldwide, backed by more than 8 billion branded cards in circulation.
Building payment software is straightforward. Building a trusted network accepted by billions of consumers, millions of merchants, and thousands of banks is not something a new entrant can replicate quickly, no matter how much capital it has. This is precisely why every supposed disruption threat over the past two decades — merchant lawsuits, Buy Now Pay Later, crypto, real-time payments, and now stablecoins — has come and gone without denting either company’s volumes.
The Real Bear Case: Europe Wants Out
The bear case isn’t about a recession or a competitor card network. It’s Europe. The European Central Bank is advancing a digital euro, with a possible 2029 rollout, explicitly framed as reducing dependence on Visa (NYSE:V) and Mastercard. About two-thirds of eurozone card transactions currently run through non-European payment schemes. The European Parliament backed moving forward with the project in February 2026, and Europe is separately building account-to-account alternatives like Wero. It’s a real, funded, multi-year effort to shrink two American companies’ grip on European payments, and international markets outside the Americas made up 57% of Mastercard’s 2025 revenue.
How Mastercard Stacks Up
Visa (NYSE:V) trades at a similar 27x forward earnings but grew revenue about 14% last year, a step behind Mastercard’s 16-17% pace. PayPal (NASDAQ:PYPL) shows the other end of the spectrum: it trades at just 8-10x forward earnings, a fraction of Mastercard’s multiple, but revenue grew only 7% last quarter and net income fell 14% amid a restructuring under a new CEO. The contrast is the whole argument for Mastercard’s premium: cheap alone doesn’t mean better, and the market is willing to pay up for Mastercard’s growth and margin consistency that PayPal currently can’t match.
L1 Capital International Fund stated the following regarding Mastercard Incorporated (NYSE:MA) in its Q1 2026 investor letter:
“Mastercard Incorporated (NYSE:MA) and Visa remain two of the Fund’s largest holdings. Both businesses continue to deliver consistent financial performance, with double-digit earnings growth. Despite this, share prices have drifted over the past 12 months and underperformed the broader market, including a decline of more than 10% during the March quarter. This underperformance reflects concerns that emerging technologies – including agentic commerce, stablecoins and alternative payment rails – may disrupt the traditional payments ecosystem.”
A mobile phone with Mastercard app
While we acknowledge the risk and potential of MA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MA and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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