10 Best Mid Cap AI Stocks to Buy Now

7. Upstart Holdings, Inc. (NASDAQ:UPST)

Market Cap as of March 27: $4.76 billion

Number of Hedge Fund Holders: 39

Upstart Holdings, Inc. (NASDAQ:UPST) operates a cloud-based AI lending platform in the US.  B. Riley analyst Hal Goetsch upped the company’s stock to “Buy” from “Hold,” boosting the price objective to $105 from $49. The analyst anticipates the company’s revenue growth to improve because of an improvement in the macro environment and a scalable fee-based model. Elsewhere, Citi analyst Peter Christiansen upped the price objective to $108.00 from the previous target of $87.00, while reiterating a “Buy” rating. This analyst highlighted that Upstart Holdings, Inc. (NASDAQ:UPST)’s AI had previously shown success in risk separation, a trend that can continue with the integration of its Upstart Macro Index (UMI) and Parallel Timing Curve Calibration (PTCC) models. Such enhancements focus on improving the company’s ability to adjust to macroeconomic factors.

Overall, the new price target from Christiansen demonstrated a positive outlook on Upstart Holdings, Inc. (NASDAQ:UPST)’s ability to leverage the enhanced AI models to fuel future growth and manage risk effectively in the dynamic economic environment. The company’s core competitive advantage revolves around the AI-driven underwriting models, which demonstrated the ability to more accurately assess credit risk versus the traditional methods. Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Upstart Holdings, Inc. (NASDAQ:UPST) is a leading AI-powered lending platform that partners with banks and credit unions to improve access to affordable credit. By leveraging machine learning algorithms, the company evaluates non-traditional risk factors to provide more accurate credit assessments, enabling better loan approvals and pricing. Upstart aims to make the lending process more inclusive and efficient while helping its financial institution partners drive growth and manage risk effectively. Shares contributed to performance during the quarter after the company reported solid fiscal third quarter revenues that beat analyst estimates. In our view, the quarter highlighted recovering origination volumes, product expansion efforts, improved funding partnerships, and a return to positive adjusted earnings-before-interest-taxes-depreciation-amortization (EBITDA). Management emphasized that the volume growth stemmed from updated underwriting models rather than new funding partnerships. Additionally, Upstart’s funding profile has significantly improved compared to a year ago, supported by forward flow partnerships and a successful return to the asset-backed securities (ABS) markets with tightening credit spreads.”