Upstart (UPST) stands out as a rapidly expanding AI-powered lending platform, leveraging a capital-light and asset-light business model. The company reports robust results for 2025 and issues optimistic guidance for 2026, positioning it for significant growth despite inherent sector risks.
Impressive Growth Projections
Upstart anticipates $1.4 billion in revenue for 2026, accompanied by a 21% adjusted EBITDA margin. Management projects a 35% compound annual growth rate (CAGR) over the next three years, aiming for $2.5 billion in revenue by 2028. These forecasts highlight the platform’s efficiency in automating lending decisions through advanced AI technology.
Compelling Valuation
Currently, Upstart trades at a forward price-to-earnings ratio below 10, offering investors a rare growth-at-a-reasonable-price opportunity. This valuation appears undervalued given the company’s strong performance and expansive outlook in the AI lending space.
Key Risks to Consider
Investors should note cyclical challenges in lending, including potential dilution from stock-based compensation. Macroeconomic pressures, particularly Federal Reserve interest rate hikes, pose risks to loan origination volumes and could pressure the share price.
