Every investor dreams of becoming a millionaire.
In the stock market, there are two primary ways to achieve that status. You can invest and rely on the power of compounding over time and adding to your portfolio, or you can find a lottery ticket -- a stock that can 10x or better, significantly accelerating your gains toward the million-dollar mark. Some investors benefit from both of these strategies.
If you're looking for a stock that can deliver 10x returns, you'll want to focus on several key characteristics. Those include rapid growth, potential for disruption, growth opportunities, a large addressable market, a reasonable valuation, and, possibly, a misunderstood business model, which gives it added upside potential.
One stock that can deliver those kinds of returns is Upstart Holdings (UPST 5.19%), and it has all of the qualities above.
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What is Upstart Holdings
Upstart is an AI-based loan originator. The company develops predictive algorithms that, it claims, have created a better screening model than traditional FICO scores. Upstart says that its model achieves both higher approval rates and lower default rates than more common alternatives like the FICO.
Lending is perhaps one of the best use cases for AI as predicting credit-worthiness for an individual borrower is difficult, and virtually impossible to do perfectly at scale, but it's a problem that AI can help solve because there is so much data involved.
As an AI company, Upstart continues to make updates and improvements to its models, which have improved its approval rates and the overall business. Those updates have also driven blowout growth in the business lately.
In the third quarter, Upstart reported a 128% increase in transaction volume, with loans originated increasing to 428,056. Its conversion rate, or the percentage of loan applications that are approved and then funded, rose from 16.3% to 20.6%. As a result of that growth, revenue jumped 71% to $277 million, which includes 54% growth in revenue from fees to $259 million. Upstart also earns revenue on interest income and adjusts its revenue for interest expense and fair value adjustments.
While Upstart was unprofitable for most of the post-pandemic era, it's turned that around thanks to the model improvements above, and it reported a generally accepted accounting principles (GAAP) profit of $31.8 million, or $0.23 per share in the quarter.
Based on the company's recent momentum and its guidance, its margins should continue to improve even as revenue growth is likely to moderate.
NASDAQ: UPST
Key Data Points
The growth opportunity
Upstart currently has a market cap of less than $5 billion, meaning the stock could 10x and still be worth less than $50 billion. Considering the value of other fintech stocks, such as those in the BNPL sector, that target seems achievable if Upstart continues to execute.
Upstart started off with unsecured consumer loans, and it has since expanded to larger credit markets in auto loans and home loans. It's currently experiencing exponential growth in those markets, though it's off a small base.
Despite this potential, Upstart struggled last year, falling 29% on broader concerns about credit risk. However, management has said it hasn't seen any differences in delinquencies, at least as of last November, though investors seem to be worried about weak employment and consumer spending, as well as rising rates of auto delinquencies in the broader finance industry.
The stock looks reasonably priced at a price-to-earnings ratio of around 30 based on the consensus adjusted earnings per share for 2025, and its technology gives it both a competitive advantage and the potential to expand into new financial businesses or to go further with licensing its technology.
Management is focused on expanding to new lending products, growing in areas like home and auto, and adding new funding partners. The stock is risky like any other company exposed to the financial cycle, but management has overhauled the business after the pandemic, issuing several rounds of layoffs and improving its model, and it's showing results.
If the company can maintain the momentum it showed in 2025, it could easily be a multibagger. It's just the kind of stock that can help make you a millionaire.
