Block (XYZ) is back in focus after reporting first quarter 2026 results that topped profit forecasts, raised full year guidance, and highlighted cost savings from AI linked job cuts and restructuring.

Despite the latest 1-day share price return of around a 1% decline, Block’s 30-day and 90-day share price returns of 16.96% and 25.32% suggest momentum has picked up again. However, the 5-year total shareholder return of a 64.42% loss shows longer term holders have faced a very different experience.

If Block’s AI push has your attention, it can be useful to see what else is moving in related areas, starting with 60 profitable AI stocks that aren't just burning cash

With Block trading around US$70 and flagged as roughly 20% below one estimate of intrinsic value, plus a discount to analyst targets, investors may ask whether this represents a genuine entry point or if expected growth is already reflected in the price.

Most Popular Narrative: 28.4% Undervalued

Block’s narrative fair value of $97.93 sits well above the last close at $70.14, which naturally grabs attention when the stock is already trading below one internal cash flow estimate.

Under a three-year projection with 6% annual revenue growth and a 10% profit margin, Block's earnings power scales steadily from its current base. Applying a 25× future P/E multiple to those projected earnings yields an implied future share price of approximately $97.

Curious what sits behind that earnings ramp, the margin target and the chosen future multiple? The narrative ties them together in a very specific way, and the numbers tell a tight story.

Result: Fair Value of $97.93 (UNDERVALUED)

However, this narrative can unravel quickly if regulatory issues flare up again or if competition in payments and consumer finance begins to pressure margins and user growth.

Another Angle on Valuation

The narrative fair value and internal cash flow estimate both point to Block looking undervalued around $70, yet the current 32x P/E tells a different story. That is higher than the US Diversified Financial industry at 17.1x, the peer average at 25.1x, and even above a 23.3x fair ratio the market could move towards, which would mean less room for error if sentiment shifts. So is this a mispriced opportunity, or is the stock already charging you upfront for the growth story?

Next Steps

If this mix of optimism and concern feels familiar, treat it as your cue to look under the hood yourself, act promptly while sentiment is split, and then weigh up the 3 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.