In a Shift for Underdog Investors, Upstart's AI-Driven Stock Becomes a Compelling Buy Opportunity.

In a Groundbreaking Shift for Upstart, the Case for Investing in Its AI-Powered Shares Strengthens Exponentially.

Last week, shares of Upstart, a tech-forward lending platform, saw a massive surge after smashing earnings expectations and executing across the board in Q4 2024. Thecompany's impressive growth in loan origination volume, driven by its AI models and strategic partnerships, stood out, even in the face of elevated interest rates.

Upstart's stock soared more than 30% on Feb. 12 despite a higher-than-expected inflation reading for January. Let's dive into the details and see why stock investors should keep their eyes on this AI fintech company.

In-depth analysis

The numbers

Upstart's Q4 loan transaction volume skyrocketed by 68% to $2.1 billion, resulting in a 56% increase in revenue to $219 million. Total fee revenue climbed 30% to $199 million, indicating robust underlying growth. The company's GAAP net loss narrowed to $2.8 million from $42.4 million in Q4 2023, and its adjusted EPS climbed from a loss of $0.11 to a profit of $0.26, far exceeding estimates of a $0.04 per-share loss.

Leaving the competition behind

Upstart might be technologically-focused lending platform, but its game-changing AI technology gives it the edge it needs to stand out from the crowd. The company's proprietary AI model is more effective than traditional FICO scores for approving borrowers' applications, and it approves more borrowers at a lower default rate.

Upstart's AI has a significant impact on its operations. In fact, 91% of its loans are approved by automated systems, with the latest model (Model 18) increasing loan origination dollars by more than 15% while preserving credit quality in Q4 2024.

The company's AI model approves 101% more applicants than traditional lending models and offers APRs 38% lower than traditional lenders. According to CEO Dave Girouard, "Upstart is building the foundation model for credit. Nobody else is even trying."

Throughout 2025, Upstart expects revenue of about $1 billion, marking an impressive 50% increase from 2024. By maintaining a GAAP net income of at least breakeven, the company is set to enter a new phase of growth.

The opportunity lies ahead

Addressing a massive market

With an addressable market of $3 trillion in loan originations, across personal, auto, home, and small business loans, Upstart has a vast market to tap into. Personal loans, which the company has a strong foothold in, represent a small fraction of this, leaving plenty of opportunities for growth.

Licensing and monetizing AI technology

In the past, Upstart has engaged in licensing deals with other lenders. With its AI technology becoming more accurate and its performance against FICO scores improving, licensing deals could be a significant revenue stream in the future.

AI algorithms improve with data

Upstart's AI algorithms are intended to develop and improve as the company gathers more data, further emphasizing its competitive advantage and creating a powerful flywheel effect that can draw in more lending partners and reach more consumers.

Macroeconomic considerations

By closely monitoring macroeconomic factors, Upstart notes that its proprietary Upstart Macro Index fell during 2024. This is a positive sign for the company's performance in 2025, as lending factors have improved compared to 2024.

With its impressive AI technology and proven growth track record, Upstart has cemented its position as a leader in the world of AI fintech. Its addressable market is vast, and with continued development of its AI algorithms, efficient operations, and strategic partnerships, there's ample potential for growth and profitability in 2025 and beyond.

Investors have shown undeniable interest in Upstart, a tech-focused lending platform, as its stock surged by 30% after delivering impressive earnings in Q4 2024, differentiating itself through its AI models and strategic partnerships, even in the face of elevated interest rates.
Financing options, such as HELOCs, could potentially benefit from Upstart's AI technology, as the company's proprietary model approves more borrowers at a lower default rate than traditional FICO scores. This could lead to increased creditworthiness and accessibility for consumers seeking these loans.
The upstart fintech company's impressive growth in loan origination volume, revenue, and EPS performance has attracted the attention of stock investors, underscoring the potential of AI in the financial sector and positioning Upstart as a leader in the future of finance.
Upstart's creditworthiness, as evidenced by its narrowing GAAP net loss and increasing adjusted EPS, coupled with its monetization potential through licensing deals and AI algorithm improvement, make it an enticing investment opportunity for those looking to invest in the AI fintech landscape.