AI lender Upstart posts 159% growth despite 27% stock drop

Upstart Holdings stock has dropped 27% over the past 30 days amid broader concerns about regional bank credit losses, despite the AI lending company showing no direct involvement in recent banking issues. The selloff may present a buying opportunity ahead of Upstart’s November 4 earnings report, as the company continues posting explosive growth and trades at attractive valuations.

What you should know: Upstart’s AI-powered lending algorithm analyzes over 2,500 data points compared to traditional FICO scoring’s handful of factors, delivering 92% automated approvals instantly.

• The company originated 372,599 loans worth $2.8 billion in Q2 2025, representing 159% year-over-year growth and a three-year high in dollar volume.
• Second-quarter revenue jumped 102% to $257 million, marking the fourth consecutive quarter of accelerating revenue growth.
• Upstart returned to profitability with $5.6 million in net income during Q2 and is on track for its first profitable year since 2021.

The big picture: CEO Dave Girouard expects AI to replace all human loan assessment methods within 10 years, targeting $25 trillion in annual global loan originations and $1 trillion in potential fee revenue.

• The company has expanded beyond personal loans into automotive and home equity line of credit segments.
• Federal Reserve rate cuts in late 2024 boosted loan demand, while algorithm improvements converted more applicants into borrowers.

Why this matters: Upstart’s algorithm has consistently outperformed traditional lending methods, and the company recently won a new regional bank client on October 15 for personal loans, car loans, and HELOCs.

• Management raised full-year 2025 revenue guidance to $1.055 billion, which would mark the company’s first time crossing the billion-dollar milestone.
• The stock’s recent decline appears disconnected from company fundamentals, as there’s no indication Upstart’s technology contributed to regional banking issues.

Attractive valuation: Upstart trades at a price-to-sales ratio of 5.6, representing a 50% discount to its 11.1 average since its 2020 IPO.

• Using Wall Street’s 2026 revenue forecast of $1.34 billion, the stock would need to rise 55% just to maintain its current valuation multiple.
• To reach its historical average P/S ratio, shares would need to surge 208%, suggesting significant upside potential for long-term investors.