Down 30% in 2026, Is Upstart an AI Stock to Buy Right Now? | UPST Stock Analysis
Summary
Parkev provides an analysis of Upstart, an AI-driven lending platform that is currently navigating a business recovery following a difficult period in 2022. Parkev notes that while the company faced a lender exodus due to rising interest rates, it has recently secured $5 billion in new commitments and is achieving a 100% renewal rate with institutional partners. Revenue has reached a record $1.25 billion over the most recent trailing 12-month period, which is nearly four times its 2020 levels.
Parkev highlights that the core of Upstart's thesis is its use of artificial intelligence to streamline the lending process, reducing costs and improving convenience for consumers in segments like automotive and mortgage loans. Although operating margins were hit by the central bank's rate hikes, Parkev observes that margins are beginning to improve as the business rebounds. Parkev acknowledges significant macroeconomic risks, including high oil prices, tariffs, and a slowing economy, but suggests that government policy adjustments or rate cuts could offset a recession.
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Reasoning: Parkev considers Upstart an excellent buying opportunity for those with a high risk tolerance, citing a significant valuation gap. Parkev notes the stock is trading at a forward P/E of 9, its lowest ever. Through a discounted cash flow valuation, Parkev calculated a fair value of $79 per share, suggesting substantial upside from the current price of approximately $31. Parkev believes the stock could more than double in the next 12 to 18 months as the business recovers and expands into new loan categories.