Forget the Usual AI Suspects. This Stock Could Be a Massive Winner as the Latest OpenAI Partner.

Consumer financial products giant Synchrony Financial (SYF) is a stock many investors pay close attention to. 

Why, might you ask?

Well, this is a stock that provides investors with one of the cleanest lines of sight into how the U.S. consumer is doing. With its quarterly reports, investors can glean a sneak peek into the true strength (or lack thereof) of the consumers, who drive the vast majority of the American economy.

Outside of earnings reports, major announcements are also worth paying attention to. I think the company's recent announcement that it's working with Open AI to advance a new AI-native shopping and checkout process is one that could potentially be game-changing.

Just What Exactly Did Synchrony Announce?

This week, Synchrony Financial announced plans to work with OpenAI and its core ChatGPT service to provide a new plug-in with some impressive potential capabilities. It should be no surprise to many in this regard to see SYF stock tick up on the news.

This plug in will reportedly allow consumers to find deals and promotional pricing, while also improving the company's rewards, loyalty and financing capabilities. With companies everywhere looking for an edge in creating the best possible customer service experience for their end users, this is a big deal. 

The company's press release suggests it will be using the latest models from the OpenAI ecosystem, leveraging one of the most powerful tools of our time. As such, investors in the fintech and software space will likely be looking to financial clues about future operating performance as a result of this deal in the upcoming earnings reports.

Where Does This Stock Stand Right Now?

Currently, Synchrony's financials do appear to be very strong, and this stock looks about as cheap as can be (at least in the tech space), in my view. 

With both a trailing and forward price-earnings (P/E) multiple hovering around 8 times and a price-earnings-to-growth (PEG) ratio of just 0.76, there's no doubt it's difficult to find any tech-related name trading at such levels right now. With this AI integration, I do think investors could start bidding up shares of this company, if Synchrony can indeed show positive operating leverage as a result of the deal.

For now, the market appears to view Synchrony Financial as a so-called “show me” story. That's fair, considering this is a company with robust margins (at 15%), but not mind-blowing earnings power. If this integration can improve Synchrony's bottom-line performance, I do think this is a name that could catch a bid.

The fintech giant does have a strong return on equity (of more than 23%) and has a reasonable debt load, making this one of the more attractive names that's come across my desk in some time. Personally, I'd consider this stock a buy, and it's a new entrant on my watch list after diving into its fundamentals. I'll wait to see more on how the company's performance improves, or doesn't, as a result of this deal and make my investment decision at a later date.

What Does Wall Street Think of SYF Stock?

Currently, the consensus price target on SYF stock sits at $88.91 per share, implying right around 15% upside from here.

Now, double-digit upside for any time is worth considering, though I do think the Street may be overly bearish on this name, at least right now. With a varied mix of analyst ratings on the name, there's a bifurcated view around where this stock is headed from here. That said, if the company's operating model does indeed improve, I do think the Street-high price target of $104 per share is well within reach.

We'll have to see, of course—tech and software names more broadly have seen a bumpy road thus far this year. That said, investing at the right price in any stock is what most investors should be considering, and this is certainly an attractive option to me right now.