Upstart Stock (UPST): Could Wall Street Be Right For 90% More Gains In This AI Lending Disruptor?

TradingKey - The artificial intelligence frenzy has buoyed much of the U.S. equity market, but not all AI-related companies have participated in the rally. Upstart Holdings (UPST) is a prime exception. Upstart’s share price is still significantly depressed compared to its historical levels, despite the company’s dramatic bounce back to revenue growth and profitability.

That divergence is beginning to attract more attention on Wall Street. Upstart stock could deliver from 30% to nearly 90% upside in the next 12 to 18 months, according to analyst estimates tracked by The Wall Street Journal. For investors who are able to look through short-term macro uncertainty, the company’s place at the nexus of AI and consumer credit is starting to look mispriced.

A Beaten-Down AI Stock in a Strong Market

While the S&P 500 has been enjoying robust gains on excitement about artificial intelligence, Upstart stock is still down about 35% over the last 12 months. The drop reflects continued worries about the financial health of U.S. consumers, soaring unemployment risks, and the volatile nature of the lending business.

But the fundamentals are heading in the opposite direction. In the fourth quarter of 2025 (ended Dec. 31), Upstart disclosed revenue of $277 million, a 71% year-over-year increase, and a GAAP net profit of $31.8 million, compared to a GAAP loss a year earlier. Loan originations jumped 128% to more than 428,000, demonstrating that demand is bouncing back even as the market hesitates.

This trade-off between delivering stronger operating performance and a skeptical equity market is what lies behind the valuation disconnect that the analyst community is now discussing.

AI Underwriting Is Reshaping the Way Credit Decisions Are Made

Traditional lenders still place a heavy emphasis on FICO scores and use inflexible, rules-based models that look at only a tiny portion of a borrower’s financial information. Upstart’s platform was created to challenge that mentality.

The company’s AI models evaluate more than 2,500 data points for each applicant and are constantly evolving as loans are repaid or go into default. The platform is now deeply ingrained in the lending process and is used in credit authorization, fraud detection, customer acquisition, and default prediction.

During the last quarter, 91% of applications were completed fully autonomously, with no human intervention. What used to take days or weeks to manually review is now done in an instant, allowing for what management calls “always-on” credit — credit for consumers at any time, in any channel, digitally.

Most notably, in the rate shock period of 2022–2023, loans originated through Upstart’s AI models performed better than those originated through traditional means, making the case that machine-driven underwriting can be both faster and more precise.

A Market in the Trillions, Not Billions

The stakes are huge. More than $25 trillion in loans are originated globally each year, and the credit ecosystem captures about $1 trillion in fees annually. Upstart’s leadership expects AI to take over for most human-driven underwriting in the next 10 years, making the company a core infrastructure provider for that shift.

Although the unsecured personal loan remains the core business, Upstart is beginning to move into car finance, home equity lines of credit (HELOCs), and small-dollar loans. In the most recent quarter, originations in auto and home lending increased fivefold and fourfold, respectively, compared with the same period a year prior.

Broadening the product mix leads not only to a higher Total Addressable Market (TAM) but also results in less exposure to any single credit category as the platform scales.

Financial Momentum Is Re-Establishing Itself

The recent results indicate that Upstart is bouncing back from its post-rate-hike slump with a leaner cost base and strengthening operating leverage.

• Operating expenses increased only 22% while revenue grew 71%, resulting in a rebound in profitability.
• Adjusted EBITDA was $71 million, representing a significant turnaround.

There was one key point of caution: approval rates moderated to 20.6% from 23.9% in the previous quarter as the AI models took a more conservative approach in the face of macro volatility. The good news, meanwhile, is that consumer credit quality has not deteriorated significantly and is improving in some pockets, according to management. In effect, growth is being managed by prudent risk assessment rather than being broken by a collapse in demand.

Analyst Targets, Valuation and the Case for Re-Rating

There are currently 16 analysts covering Upstart on Wall Street. The consensus target price is near $55, representing around 30% upside, while the most bullish target price of $80 represents close to 90% upside.

On a valuation basis, the stock trades for a price-to-sales (P/S) ratio of about 4.3, significantly less than its historical mean of approximately 10.9 since its IPO. A partial normalization of that multiple — if growth and profitability hold — would spell a much higher Upstart share price.

Negatives and Areas of Controversy

Cycles are Upstart’s burden. If employment and consumer balance sheets deteriorate more sharply than expected, loan volumes will be under pressure and the company may have to keep its models conservative for longer. The business is also subject to interest-rate sensitivity and the availability of funding from its banking partners. Additionally, the stock’s recent past illustrates how quickly investor sentiment can fluctuate when quarterly volume figures disappoint.

What it Means for Investors

At its current price, Upstart stock embodies a market that is worried about macro risk rather than the improving fundamentals and long-term strategic positioning of the company. The combination of accelerating revenues, a return to profitability, expanding product lines, and a massive addressable market suggests a strengthening long-term narrative.

For those who are bullish on the potential of AI to fundamentally change how credit is priced and distributed, Upstart is one of the cleanest plays in the public markets. The near-term path may be volatile, but the risk-reward profile at today’s valuation is becoming increasingly compelling.