Be Careful With This Red-Hot AI Stock
Shares of artificial intelligence-powered lending platform Upstart (NASDAQ: UPST) have surged nearly 300% so far this year. The rally looks a lot less impressive if you zoom out a bit -- the stock is still down a whopping 86% from its all-time high.
Still, with the stock almost quadrupling in 2023, it's worth asking whether it makes sense to jump on the bandwagon and follow those investors piling into Upstart. While the stock could be a winner in the long run, Upstart looks risky.
Upstart claims that its AI models produce a better assessment of default risk for lenders compared to traditional credit scores. That was certainly true before the pandemic and through 2020. During this time, Upstart's loans outperformed expectations considerably in terms of gross returns.
Source Fool.com
