Upstart Shines with Strong Quarterly Figures and AI Advances

The shares of the AI-driven credit platform Upstart experienced a sharp increase of 48.9% during the afternoon trading session after the company released its second-quarter results. Revenue, adjusted operating income, and earnings per share significantly exceeded analysts' expectations. Furthermore, Upstart provided an optimistic revenue forecast for the upcoming quarter, surpassing market observers' predictions. Management attributed the positive sentiment to advancements in the company's AI models. Overall, it was an impressive quarter that is bound to please shareholders. Given these developments, the question arises: Is now the right time to invest in Upstart? Our full analysis report is available for free. The volatility of Upstart shares remains immense; over the past year, they recorded 59 movements of more than five percent. Such drastic swings are rare even for Upstart and suggest that this news had a significant impact on the market's perception of the company. The largest price drop in the past year occurred six months ago when the stock plummeted by 24.1%. At that time, fourth-quarter results were released that did not meet revenue forecasts for the upcoming quarter, attributed to a more challenging credit environment. The revenue forecast accounted for the usual 'seasonal weakness' that occurs in the first quarter of the year. Additionally, the results revealed a significant cash burn during the quarter. Moreover, Upstart recorded a notable decline in gross margin, negatively affecting other profitability metrics. Lastly, an increase in loan defaults among wealthier segments of borrowers was observed. Overall, it was a weaker quarter for the company. Since the beginning of the year, Upstart's stock has fallen by 8.8% and is currently trading at $35.42. This represents a 31.8% decline from its 52-week high of $51.97 in August 2023. Investors who purchased Upstart shares for $1,000 at the IPO in December 2020 would now be looking at an investment of $1,200. It should now be apparent that generative AI will significantly alter the business practices of large corporations. While Nvidia and AMD are trading near their all-time highs, we prefer a lesser-known but still profitable semiconductor stock that benefits from the rise of AI. Our free report on our favorite semiconductor growth story can be found here.