While Upstart (NASDAQ:UPST) focuses on artificial intelligence in 2023, the company isn’t just jumping on the AI bandwagon. UPST stock earns a solid “B” grade because Upstart is deploying its technology in a useful and interesting way.
Financial traders should weigh their tolerance for risk before considering an investment in Upstart.
What Upstart seeks to achieve is certainly commendable. If qualified borrowers can get access to needed funds through Upstart’s AI-enabled technology, that’s a win-win scenario.
With that in mind, let’s delve into the technological innovations that make Upstart such a unique startup. Always remember, however, that UPST stock is a fast mover and isn’t appropriate for all portfolios.
Is UPST Stock Just Another Meme Stock?
Sometimes, cautious investors will avoid a stock because it’s a meme stock. That’s understandable, but it would be a shame to miss out on a stock’s upside potential if it has been mislabeled.
UPST stock exploded from $13 at the beginning of May to $70 in early August. It’s possible that a short squeeze contributed to this rally. However, it’s also possible that financial traders became enamored with Upstart because of the company’s AI connection.
But again, Upstart isn’t a bandwagon jumper or a newcomer to AI technology. As the company proudly states, Upstart “pioneered the application of #AI to #lending, enabling a system that is dramatically more efficient and more accurate for both borrowers and lenders.”
Upstart uses “sophisticated machine learning algorithms” to “tease out relationships between more than 1,500 variables.” Upstart can more accurately predict the likelihood that a borrower will default on a loan. The ultimate result is a lending paradigm that’s fairer and less cumbersome for all parties involved.
Small Lenders Embrace Upstart
At some point in the future, you might see mega-banks using Upstart’s AI-enabled lending technology. If that happens, UPST could move much higher from its current price.
Already, several small lenders have selected Upstart for its AI-embedded technology. Three examples are CME Federal Credit Union in May, Texas Bay Credit Union in June and Arbor Financial Credit Union in July.
Early investors in UPST stock might catch a shooting star before it becomes a household name. Yet, there’s no guarantee that Upstart will succeed in the long run. Upstart’s investors should be fully prepared for volatility.
If you’re seeking an investment with less risk, you can always just buy shares of a traditional big bank. Upstart should appeal to ambitious financial traders with an appetite for risk.
A Possible Strategy With UPST Stock
First and foremost, weigh your risk tolerance as an investment in Upstart isn’t appropriate for everyone. Next, be sure to check Upstart’s press releases page frequently for updates (and of course, keep checking InvestorPlace as well).
Finally, if you’re ready, you might take a very small share position in UPST stock. For example, an investment in Upstart could take up 2% of your entire portfolio.
That way, you’ll have some exposure to Upstart’s potentially game-changing AI lending technology, without over-leveraging yourself and taking on too much risk.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
