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Investing.com -- Morgan Stanley said PayPal’s newly announced partnership with Google marks progress but is unlikely to deliver a meaningful financial boost in the near term.
The agreement, unveiled Wednesday, will see PayPal integrate its Branded Checkout and Enterprise Payments across Google products, including Ads, Play, and Cloud.
In return, PayPal will use Google’s AI capabilities to improve payment services and build new commerce experiences.
Morgan Stanley welcomed the move, writing: “We’ve consistently said we like partnerships that expand and enhance capabilities while scaling product reach with limited incremental investment.”
The bank noted PayPal is wisely leveraging Google’s AI to reduce shopping friction without the heavy costs of building tools from scratch.
Still, analysts cautioned against overestimating the impact. “Integration as a payment provider might help investors build more conviction in medium-term targets, but we think the partnership is unlikely to meaningfully move the needle near-term,” Morgan Stanley wrote.
The firm estimates PayPal’s share of Google’s processing will grow slowly, with economics “likely to be lower than average (~15 bp gross profit take rate for Braintree overall).”
PayPal is targeting Branded Checkout growth of 8–10% by 2027, up from mid-single digits today, which management expects to support high single-digit gross profit growth. But Morgan Stanley said it does not expect the Google tie-up to accelerate results this year.
On the tech side, Morgan Stanley said PayPal’s partnership with Google Cloud to modernize its infrastructure is “a step in the right direction,” though it may also reveal that its technology limitations “are worse than feared.”
Taking a more positive view of the partnership, analysts at Baird said they believe the deal "should enhance agentic commerce opportunities for both companies, integrate PayPal Checkout and processing across Google services, and expand PayPal’s use of Google Cloud."
"We expect the partnership to provide an incremental growth opportunity for PayPal in addition to accessing advanced AI technology from Google that PayPal would unlikely develop on its own," Baird added.