Upstart Surges on Record Revenue but Wall Street Remains Divided

At Upstart Holdings (NASDAQ: UPST), using artificial intelligence is not new. What would be new is if it could wrap a successful, steady business model around it.

The company’s most recent results suggest such a development might be on the way. Revenue is surging, profits have returned, and management is setting bold targets. With a new CEO expected May 1 and the company’s recent push for a bank charter, Upstart is clearly making some moves.

For aggressive investors who tolerate volatility and believe in AI’s lending potential, Upstart could be attractive. More cautious investors, though, might want to wait for signs that profitability can hold up and for the 2026 revenue guidance to prove achievable.

Strong Rebound in Revenue and Profitability

Although analysts remain cautious, Upstart did score a sharp reversal in 2025. Total annual revenue hit $1 billion for the first time. That was up 64% from 2024. The company facilitated nearly 1.5 million loans worth roughly $11 billion, an 86% increase year-over-year.

Even more striking, Upstart generated $230 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) last year, with a margin of 22%. That was up from around $10 million the year before.

Net income came in at nearly $54 million for the full year, compared with losses in prior periods. Earnings per share for the fourth quarter were 17 cents, besting analyst expectations of 15 cents. Revenue for the quarter was also higher than projected.

AI-Driven Lending Model Under Scrutiny

Upstart’s business relies on AI to help it originate loans for lenders. It typically does not hold the loans it generates long-term. Money collected from fees represented about 95% of its overall revenue last year.

Still, the creditworthiness of the borrowers it approves matters. Upstart’s pitch is that its AI models can assess a borrower’s creditworthiness more accurately than a FICO score. The 2025 results suggest it’s giving lenders what they want. Upstart’s loan conversion rate, which is the share of applicants who get and accept an offer, rose to 19.4% in 2025 from 15.1% the prior year.

In the fourth quarter alone, the company reported $3.2 billion in origination volume, up 52% YOY. That’s an impressive runup. Yet it did come at a cost. While contribution profit rose 15% in the quarter, the contribution margin slipped to 53% from 61% as it ramped up to win business in a competitive market.

Growth Strategy and Leadership Transition

Coming off the strong showing last year, Upstart also has big plans for 2026. Management is eyeing a 40% increase in total revenue this year to approximately $1.4 billion. The forecast for an adjusted EBITDA margin of around 21% is relatively flat.

As part of its positioning, Upstart announced in early February that Paul Gu, co-founder and chief technology officer, would assume the CEO role on May 1. In early March, the company said it would apply for a national bank charter to take deposits, make loans, and help simplify its operational structure. It has also introduced a revolving line of credit for customers.

Overall, the company is targeting a compound annual revenue growth rate of roughly 35% through 2028 and a long-term EBITDA margin near 25%. If those numbers prove realistic, Upstart could move from a volatile growth stock into a self-sustaining, cash-generating platform.

Wall Street Remains Divided

Even with the company’s optimistic view, though, analysts remain cautious. Of the 16 analysts who cover Upstart, the consensus is a cautious Hold, with an average price target of about $48, representing a roughly 90% upside from its recent price.

The market surely remembers 2022, when interest rates spiked and Upstart’s business—and stock price—nearly collapsed. Even with the strong earnings last year, shares have roughly halved from their early-2025 levels.

Today’s spread of opinions shows just how volatile the company’s fortunes might be. The range of target prices is from $20 on the low side up to $80 per share. Six analysts rate Upstart as a Buy, six have it as a Hold, and four are recommending a Sell.

That disagreement reflects a genuine uncertainty.

Volatility, Valuation, and Key Risks

Even though Upstart’s business model is asset-light as it doesn’t hold the loans itself, that doesn’t make it recession-proof. Upstart’s fate is closely tied to credit conditions and the economy. There’s also the competitive threat as traditional players in the financial sector upgrade their own credit models and fintechs explore AI-driven underwriting.

All this comes down to the fact that Upstart’s stock is not for everyone. Double-digit percentage swings are common and the price/earnings ratio approaching 60 remains rich. At a recent price in the mid $20s, the stock reflects considerable optimism about future profit growth that hasn’t yet materialized.

Before you make your next trade, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now…
See The Five Stocks Here

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.