Plenty of financial traders seek exposure to the expanding market for artificial intelligence technology. One way to participate is by buying and holding Upstart (NASDAQ:UPST) stock.
However, investing in Upstart is a high-risk and high-reward proposition, so don’t jump into the deep end of the pool without due consideration.
In a nutshell, Upstart applies AI to lending, thereby enhancing efficiency, accuracy and fairness for borrowers and banks. Upstart is a disruptive business that could upend traditional finance as we know it.
Moreover, investing in a disruptor can be exciting – but then, not everyone is adventurous. As we’ll discover, UPST stock has gone on a wild ride in 2023 so far, and there could be more thrills and spills ahead.
UPST Stock is Popular with Credit Unions
Some lending institutions trust Upstart, while others (mostly big banks with traditional approaches) may still be wary of Upstart’s trailblazing technology.
InvestorPlace contributor Chris MacDonald pointed out that Upstart’s AI models enable 53% lower default rates. So, are some big banks threatened by Upstart?
They probably are, but smaller banks may have more open-minded approaches to modern lending. Thus, Upstart is becoming quite popular among local credit unions in 2023.
Just to provide a handful of examples, CME Federal Credit Union partnered with Upstart in May, followed by Texas Bay Credit Union in June and Arbor Financial Credit Union in July. Then, Upstart formed agreements with Farmers Insurance Federal Credit Union in August and Naveo Credit Union in September.
The list goes on and on. Clearly, if you’re looking to capitalize on the AI gold rush of the 2020s, Upstart is a company to keep on your watch list.
UPST Stock’s Massive Pop and Drop
Does all of this mean you should go all-in on UPST stock? Not so fast. We’re giving the stock a “B” grade instead of an outright “A” because it’s not appropriate for all investors.
For instance, some investors might prefer “steady Eddie” stocks that don’t make huge, sudden price moves. In that case, they might choose to stick to blue-chip stocks that provide a moderate degree of AI tech exposure.
This summer, UPST stock made a round trip from $30 to $72 and back. To a certain extent, this was because of factors that were out of Upstart’s control.
The market gyrated as financial traders responded to Federal Reserve officials’ hints about the future trajectory of interest rates. Naturally, the path of interest rates will have a profound impact on Upstart.
The market is still sorting out the winners and the also-rans of the AI revolution. Whenever a new technology emerges, certain stocks will be subject to heightened volatility. UPST falls into this category, so don’t assume that investors will experience a “soft landing” in the coming months.
Are You Prepared for Volatility?
Upstart is a fascinating company that could become a household name someday. If you’re strongly bullish on AI’s future growth potential in the lending market, keep an eye on Upstart.
Overall, we’re assigning a “B” grade to UPST stock and risk-tolerant traders might consider it for a small share position.
If you can only tolerate “steady Eddie” stocks in your portfolio, then an investment in Upstart might not be appropriate for you.
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.