Software’s Second Act: AI Shifts From Threat to Catalyst In my opinion, software stocks are resurfacing after a difficult 2026 because investors may have become too pessimistic about AI’s disruptive impact. I have seen concerns that generative AI could undermine traditional SaaS models, reduce per-seat pricing, and make customized software dramatically cheaper to build. Those fears drove significant multiple compression, particularly among small-cap software stocks.
More recently, I have seen encouraging evidence that AI may be an accelerant rather than an existential threat. I was very impressed with the earnings results from Snowflake (SNOW) and the possibility that the positive trend will impact other software stocks. Snowflake reported product revenue growth of 37% YoY, while remaining performance obligations increased 30%. Management also raised its full-year outlook and indicated that AI products contributed meaningfully to its recent growth acceleration. ServiceNow (NOW) has similarly reported strong adoption of AI-enabled products.
In my view, this creates an attractive setup for smaller software companies. If earnings continue to validate AI monetization, the AI trade could broaden from companies building the infrastructure to software companies monetizing it.
Small-Cap Tech Stocks Quietly Outperform Big Tech Despite AI concentration concerns and shifting interest rate expectations, the stock market has remained resilient as investor confidence improves. In the latest AAII Sentiment Survey, bulls retook the lead, with expectations stock prices will rise in the next six months up 6.8 percentage points. According to its August Asset Allocation Survey, equities reached 71.1% of investor portfolios, the highest level since late last year.
Bullish Investor Sentiment Regains The Upper Hand (Week Ending 9/2/2026)
Bloomberg
Tech stocks in particular have been able to endure volatility in the past month to post positive returns, lifted by blowout earnings from software giants like Salesforce (CRM) and Palantir (PLTR) and rising sector earnings expectations.
However, investors suffering from AI mega-cap exhaustion could consider select small-cap tech stocks whose earnings are not directly dependent on the hyperscaler capex cycle. In addition, these same stocks offer growth potential and stand to benefit from AI and tech-driven secular demand trends.
Although momentum has recently slowed, small-cap tech stocks have outperformed larger peers in the past year, and are trading at more attractive valuations. After gaining more than 60% in the past twelve months, Invesco’s small-cap technology ETF (PSCT) is trading at 18.3x forward earnings, a 29% discount to the S&P 500 Technology Sector (XLK), which has a forward P/E of 25.9x.
Seeking Alpha
Although small caps can offer significant upside potential, investors should assess their risk tolerance. Due to high volatility and risk, small caps are not for everyone. When any investment research firm issues a small-cap recommendation, for example, the stock can surge quickly due to low liquidity. This makes it even more crucial to ensure small-cap tech stocks have strong fundamentals, and Seeking Alpha’s quantitative tools can help investors achieve this objective.
How I Chose Top Small-Cap Tech Stocks Using Seeking Alpha’s Stock Screener, I filtered for small-cap tech stocks with Strong Buy Quant Ratings and solid Growth and Revision Factor Grades. I then narrowed the list by filtering for stocks with forward EPS growth rates above 30%. My small-cap tech basket includes two AI software names and a cloud communications company, showcasing accelerating momentum and bullish revisions, while trading at attractive earnings multiples. Moreover, their underlying businesses have little direct dependence on the hyperscaler capex cycle that has fueled the AI infrastructure boom.
1. Sprout Social, Inc. (SPT) Market Capitalization: $688.93M
Quant Rating: Strong Buy
Sector: Information Technology
Industry: Application Software
Quant Sector Ranking (as of 9/4/2026): 31 out of 530
Quant Industry Ranking (as of 9/4/2026): 5 out of 166
A provider of social media management software, Sprout Social’s revenue has continued to climb as the company expands the capabilities of its agentic AI offerings and business intelligence solutions. Sprout’s revenue grew by a CAGR of 25% over the past five years, and is projected to reach $494.61M in FY 2026. Exceptional price performance and earnings revisions helped drive the stock’s quant rating into Strong Buy territory in August.
Seeking Alpha
Broadening adoption among higher-value customers and increased renewal rates helped lift Sprout’s Q2 2026 revenue by 11% YoY. The number of customers generating at least $50K in ARR grew 16% YoY to 2,127, while customers with ARR above $30K now account for 60.1% of total subscription revenue. Total remaining performance obligations (RPO) surged 16% YoY, and multi-year deals now represent about half of Sprout’s contract mix.
Sprout Social Investor Presentation
Sprout raised its Q4 exit operating margin from 15% to 17%, citing a headcount reduction that is expected to yield $50M in annualized cost savings. The results contributed to an improving outlook, backed by 9 upward earnings revisions to no downward revisions in the last 90 days. Forward EPS growth of 45.49% underpins a solid factor grade, alongside surging operating cash flow.
Seeking Alpha
Trading at only 10x earnings vs. the sector’s 22x, Sprout continues to look attractively priced, in my opinion, even with the recent momentum, supporting an A+ Valuation Grade. Meanwhile, forward PEG - a crucial valuation metric that combines P/E and growth - sits at a whopping 71% discount to the sector. Long-term earnings visibility and an attractive valuation make Sprout a strong AI-fueled small cap to consider.
Quant Sector Ranking (as of 9/4/2026): 16 out of 530
Quant Industry Ranking (as of 9/4/2026): 1 out of 166
The top quant-rated Application Software stock, Pagaya offers AI-powered products to help lenders and institutional partners make better loan decisions. PGY soared after a huge Q2 earnings beat, and is now up more than 40% in the past three months for an outstanding Momentum Grade.
As the chart below illustrates, the stock’s accelerating price performance and bullish EPS revisions led to a dramatic turnaround in its Quant Rating over the past six months.
Seeking Alpha
The company achieved record network volume of $3.5B in Q2 2026, up 33% YoY. The network expansion helped drive revenue up by 19% to $387M, while adjusted EBITDA jumped 43%, demonstrating strong operating leverage as the business scales.
Pagaya Investor Presentation
Based on record EPS and strong visibility on the remainder of 2026, PGY raised full-year net income guidance by 25%. Anchored in a forward EPS growth rate of 70.94%, PGY showcases an A+ Growth Grade. PGY’s long-term EPS growth rate (3-5Y CAGR) of 139% is especially impressive when compared to the sector median of 19%.
The long-term EPS growth rate is a key element in the stock’s attractive valuation framework, with forward PEG at a 96% discount to the sector. PGY is also trading at a significant sector discount based on a forward P/E ratio of 6x, in addition to attractive EV/EBITDA, price/sales, and price/cash flow multiples.
Seeking Alpha
While I strongly believe PGY offers solid potential upside, investors should also weigh its elevated risk profile. PGY’s 24M beta of 2.52 indicates the stock has been substantially more volatile than the broader market. PGY also carries a short interest of 15.87%. However, when you consider the AI fintech’s strong fundamentals, exceptional growth, and attractive valuation, the reward could outweigh the risk.
3. Ooma, Inc. (OOMA) Market Capitalization: $642.36M
Quant Rating: Strong Buy
Sector: Information Technology
Industry: Application Software
Quant Sector Ranking (as of 9/4/2026): 21 out of 530
Quant Industry Ranking (as of 9/4/2026): 3 out of 166
A provider of cloud-based communication technologies, including telephony, messaging, and video solutions, OOMA has crushed the Russell 2000 in the past year, driving an A+ Momentum Grade. The company is targeting a fast-growing Unified Communications as a Service (UCaaS) and equipment market, which OOMA projects could reach $34.4B by 2029.
OOMA vs. Russell 2000 (IWM): 1Y Price Return
Seeking Alpha
Rapid growth in core business subscription and services drove Q2 FY27 revenue up by 25% YoY to $83.2 million, while EBITDA jumped by 74%. OOMA management said it expects profitable growth to continue as it expands AirDial, its analog phone line replacement solution, and integrates the FluentStream and Phone.com acquisitions. The Q2 surge in EBITDA has contributed to a solid Growth Grade, underpinned by a forward EPS growth rate of 32.02%.
Ooma Investor Presentation
Showcasing strong earnings visibility over the next three years, OOMA’s EPS and revenue outlook have increasingly improved. OOMA has seen a string of bullish EPS revisions from sell-side analysts in the past three months for a top-notch factor grade.
Seeking Alpha
Despite incredible price performance, the stock’s forward PEG represents a 41% discount to the sector, although elevated GAAP P/E metrics have weighed on the valuation grade. OOMA wraps up my small-cap tech picks, a basket of stocks showcasing strong forward earnings growth, solid EPS revisions, and accelerating momentum.
Seeking Alpha
Beyond Mega Tech: Top Small Caps With Big Earnings Growth Despite volatility fueled by concerns over an AI bubble, and shifting interest rate expectations, the market has proven resilient amid improving investor sentiment. Tech stocks have remained steady, driven by huge earnings beats by leading software companies and growing EPS targets. However, high concentration around large AI stocks has remained a top risk among fund managers, and investors may be seeking growth outside mega caps. Select small-cap tech stocks can offer similar earnings growth upside through businesses not directly tied to the hyperscaler capex cycle. In this article, I recommended three Strong Buy small-cap tech stocks offering exposure to AI and communications technology tailwinds. The three stocks showcase robust forward earnings growth, solid momentum, and bullish earnings revisions.
We have many stocks with strong buy recommendations, and you can filter them using Stock Screens to suit your specific investment objectives. Alpha Picks might be ideal if you're interested in two monthly stock picks of the top "strong buy" Quant stocks. Check out our new Alpha Picks app in the Apple App Store!
If you're looking for more frequent investment ideas, consider the PRO Quant Portfolio. It's a weekly rebalanced selection of our Top 30 Quant Strong Buy stocks, spanning multiple regions and market caps.
If you're looking for a data-driven income strategy, explore our new Quant Growth & Income Portfolio—a systematic model built to outperform dividend ETFs by focusing on yield, growth, and safety. Seeking Alpha's Quant ratings and investment research tools help to ensure you are furnished with the best resources to make informed investment decisions while taking the emotion out of investing. Happy investing!
100.87K Followers
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given that any particular security, portfolio, transaction or investment strategy is suitable for any specific person. The author is not advising you personally concerning the nature, potential, value or suitability of any particular security or other matter. You alone are solely responsible for determining whether any investment, security or strategy, or any product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. Steven Cress is the Head of Quantitative Strategy at Seeking Alpha. Any views or opinions expressed herein may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.
Key Takeaways Pagaya shares jumped 93.8% in six months, outperforming the broader market and industry peers.PGY's Q2 network volume rose 33% y/y, revenues climbed 19% and adjusted EBITDA grew 43%.Pagaya raised its 2026 outlook as funding, operating leverage and multi-product expansion strengthened. Pagaya Technologies (PGY - Free Report) shares have skyrocketed 93.8% in the past six months, outperforming the S&P 500 Index and the industry it belongs to.
If we compare the company’s price performance to its close peers, LendingTree (TREE - Free Report) and Upstart Holdings (UPST - Free Report) , it appears that the PGY stock has fared much better than both these firms. Shares of LendingTree have lost 23.3%, whereas Upstart has gained 2.8% in the past six months.
6-Month Price Performance
Image Source: Zacks Investment Research
In the first two months of this year, PGY shares came under significant pressure largely due to concerns over slowing near-term growth. Investors reacted negatively to the company’s fourth-quarter 2025 results. Although the company recorded its fourth straight quarter of positive GAAP net income in the three months ended Dec. 31, 2025 (as against negative earnings in the prior years), management issued softer-than-expected guidance for early 2026. Along with this, management’s decision to tighten underwriting standards and reduce exposure to higher-risk credit segments weakened investor sentiments, sending the PGY stock lower.
However, from March, the company’s shares staged a strong rebound, as subsequent results demonstrated that the slowdown was temporary and that profitability remained robust. PGY’s first-quarter adjusted EBITDA increased 18% year over year, prompting the company to raise its full-year net income guidance.
The momentum accelerated in the second quarter, with network volume growing 33%, revenues rising 19% and adjusted EBITDA jumping 43%. Management once again raised its 2026 earnings outlook. Investor confidence was also supported by strong capital-market execution, including several upsized, AAA-rated asset-backed securities (ABS) transactions, record funding activity, new lending partners and expansion of existing partnerships.
Stronger-than-expected operating growth, rising profitability, improved credit discipline and continued access to institutional funding together helped drive the sharp recovery in PGY shares between March and August.
Given the recent strength in price, investors might be tempted to invest in the stock now. However, before making any investment decision, it is important to examine the company’s fundamentals and growth prospects to see if it has upside potential left.
Key Fundamental Strengths of PGYDiversified Funding Base: A diversified funding base is a key positive for Pagaya. The company continues to broaden its funding base, supporting an upfront model that raises cash before loans are originated. In second-quarter 2026, Pagaya raised $3.7 billion in funding across six ABS transactions, its largest quarterly funding volume to date. It also added 11 new investors, bringing the total to 174.
Funding channels are becoming more flexible, with 40% of funding now coming through non-prefunded ABS products alongside forward flow and revolving structures.
The company has expanded its accrued loan purchasing fee receivables facility to $100 million from $65 million. This broader funding base improves execution visibility as network volume scales across personal loans, auto and point of sale (POS).
Multi-Product Expansion: Multi-product expansion is expected to deepen Pagaya’s partner economics. New products are widening partner use cases and raising revenues per application. In first-half 2026, revenues from fees increased as partner adoption broadened. The company's product-led playbook is being applied across personal loans, auto and POS, supported by pre-built integrations that can shorten partner onboarding.
In personal loans, the Affiliate Optimizer engine contributed more than $1 billion of network volume in the second quarter. Experian Activate has been adopted by key partners, with additional partners targeted in the second half of 2026, including regional banks.
In auto, Pagaya is using dynamic offer optimization to structure down payment, annual percentage rate (APR), loan-to-value and term in real time at the dealer point of sale. Seven new partners were onboarded over the last six months across personal loans, auto and POS, supporting broader penetration beyond the company's flagship product.
Improving Operating Leverage: Improving operating leverage and cost efficiency has been driving Pagaya’s earnings growth of late. Across 2025, monetization and efficiency strengthened. The company’s revenue growth outpaced expense growth, allowing margins to improve and turning prior losses into positive net income.
In 2025, adjusted EBITDA rose sharply, showing that the platform scaled efficiently as utilization increased. The company’s profitability streak continued in 2026, with spending in check. In the first half of this year, total revenues increased to $705 million from $616.4 million in the year-ago period, while operating expenses rose only slightly to $519.2 million from $512.2 million. Core operating expenses declined 6% year over year and were 31% of fee revenue less production costs, a record low.
Management noted that core OpEx has been broadly flat for about 18 months, even as revenues and profits scaled. Management expects 2026 GAAP net income of $155-$180 million and adjusted EBITDA of $460-$490 million, reflecting confidence in further scale without a major expense ramp.
Analyzing Pagaya’s ValuationIn terms of valuation, the PGY stock looks inexpensive compared with the industry at large. The stock is trading at a forward 12-month price/sales (P/S) ratio of 1.13X, below the industry average of 2.59X over the last three years.
Price-to-Sales F12M
Image Source: Zacks Investment Research
While Pagaya is trading at a discount compared with Upstart, the stock appears to be trading at a premium compared with TREE. LendingTree has a P/S (F12M) ratio of 0.30X, while Upstart has a P/S ratio of 1.65X.
How to Approach the Pagaya Stock Now?Given its robust performance in the last six months, a resilient business model and capital-efficient funding strategy, PGY continues to stand out in the fintech space. Its AI-driven platform, diversified revenue streams and reliance on forward flow agreements shield it from market volatility and credit risks.
Analysts seem optimistic regarding PGY’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Pagaya’s 2026 and 2027 earnings has been revised upward to $3.72 and $4.13 per share, respectively. The estimated numbers indicate year-over-year growth rates of 12.4% and 11% for 2026 and 2027, respectively.
Earnings Estimate Revision
Image Source: Zacks Investment Research
Thus, with accelerating earnings estimates, along with bullish analyst sentiments, PGY is well-positioned for continued growth. Moreover, the stock trades at a discount relative to the industry at large, making its valuation attractive. For investors seeking exposure to a high-growth, tech-enabled lender with solid fundamentals, the PGY stock is a compelling buy.
At present, Pagaya sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Pagaya Technologies Ltd. (PGY - Free Report) have gained 34% over the past four weeks to close the last trading session at $22.26, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $29.13 indicates a potential upside of 30.9%.
The average comprises 12 short-term price targets ranging from a low of $23.00 to a high of $36.00, with a standard deviation of $4.77. While the lowest estimate indicates an increase of 3.3% from the current price level, the most optimistic estimate points to a 61.7% upside. More than the range, one should note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.
But, for PGY, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You May Not Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why PGY Could Witness a Solid UpsideThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 16.4%, as one estimate has moved higher compared to no negative revision.
Moreover, PGY currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much PGY could gain, the direction of price movement it implies does appear to be a good guide.
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
#1 (Strong Buy) stocks have produced an unmatched +23.8% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Pagaya Technologies Ltd. (PGY - Free Report) Founded in 2016, Pagaya Technologies Ltd. operates primarily in the U.S., with corporate presence in New York and Tel-Aviv. The company applies proprietary artificial intelligence (AI) to improve credit decisioning and capital allocation across consumer finance. The platform connects lenders and institutional investors to expand access to financial products while targeting better risk-adjusted outcomes for capital providers.
PGY is a #1 (Strong Buy) on the Zacks Rank, with a VGM Score of A.
Additionally, the company could be a top pick for growth investors. PGY has a Growth Style Score of A, forecasting year-over-year earnings growth of 12.4% for the current fiscal year.
One analyst revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.49 to $3.72 per share. PGY also boasts an average earnings surprise of +43.5%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, PGY should be on investors' short list.
Key Takeaways Pagaya's 1H26 network volume rose 22% y/y to a record $6.16B, lifting total revenues 14.4%.Auto volumes surged about 140% in Q2, supported by nearly 30,000 dealerships and better decisioning tools.Pagaya expects 2026 network volume of $12.5-$13.25B, signaling continued 2H26 momentum. Pagaya Technologies Ltd.’s (PGY - Free Report) network volume, a key driver of its top line, has maintained strong momentum in the first half of 2026. Supported by strength in its Auto and Personal Loan businesses, along with a focus on prudent underwriting, PGY’s network volume increased 22% year over year to a record $6.16 billion in the first six months of this year. Fee revenue less production costs (FRLPC) rose 10.9% to $268.4 million while total revenues and other income increased 14.4% to $705 million, underscoring the positive impact of higher transaction volumes on Pagaya’s revenue base.
Auto has become a key growth driver for Pagaya. In the second quarter of this year, Auto volumes surged about 140% year over year, reaching a $4.8-billion annualized run rate. The company’s connections with nearly 30,000 dealerships, along with better pricing and decisioning tools, are helping lending partners make more competitive offers and improve conversion rates. Higher conversions, in turn, encourage dealers to send more applications through Pagaya’s network, supporting further volume growth.
Beyond Auto, Pagaya’s product-led strategy is broadening the sources of network volume. Its Affiliate Optimizer Engine generated more than $1 billion in second-quarter volume, while Direct Marketing Engine programs are expected to reach $500 million by the year-end. The company is also expanding in point-of-sale (POS) financing and adding new lending partners, which should further broaden its volume base.
Strong access to capital markets is another positive. Pagaya raised a record $3.7 billion through six asset-backed securities (ABS) transactions in the second quarter, while its institutional investor base grew to 174 investors. This funding support, combined with disciplined underwriting and stable credit performance, should help the company handle higher transaction volumes without materially relaxing credit standards.
Looking ahead, FRLPC growth may remain somewhat tempered in the near term by the mix of newer partners and products. Nonetheless, continued expansion in Auto, a healthy partner onboarding pipeline and strong funding availability should keep network volume on an upward trajectory and support top-line growth. Pagaya expects third-quarter 2026 network volume of $3.43-$3.63 billion and full-year volume of $12.5-$13.25 billion, pointing to continued momentum in the second half. Third-quarter and full-year total revenues and other income are projected at $370-$390 million and $1.43-$1.53 billion, respectively.
Comparing PGY’s Business Model With PeersLike PGY, Upstart Holdings, Inc. (UPST - Free Report) is an AI-based lending platform that aspires to become capital-light but often holds loans on its balance sheet temporarily. Its core business model involves finding financing for loans after its network of bank and institutional partners originates them.
Upstart partner banks can finance the loan by keeping it on their balance sheet. The bank can sell the whole loan on Upstart’s platform or use forward flow agreements from institutions that commit to buying a specific volume or type of loan originated on the Upstart platform in the future.
Upstart also uses securitization, wherein pools of loans are bundled together and sold as ABS to institutional investors. However, the firm frequently reverts to a balance-sheet-heavy model, especially in tight liquidity markets, making it more volatile and exposed to macro cycles.
Another close competitor of PGY is LendingTree (TREE - Free Report) . But unlike PGY, LendingTree is a marketplace platform, not a lender. It matches consumers with financial product providers like mortgages, personal loans, credit cards and insurance.
LendingTree does not underwrite, originate or hold loans. Hence, its balance sheet is not credit-heavy. TREE’s balance sheet is detached from revenue generation. The company is primarily structured to support a fee-based digital marketplace, not balance sheet lending.
PGY’s Price Performance, Valuation & Estimate AnalysisInvestors have been bullish on the PGY stock, which has appreciated 70.9% in the past six months against the industry’s 0.5% decline.
Image Source: Zacks Investment Research
Pagaya stock is currently trading at a 12-month forward price-to-sales (P/S) of 1.05X, which is below the industry average of 2.58X over the last three years.
Image Source: Zacks Investment Research
Over the past 30 days, the Zacks Consensus Estimate for PGY’s 2026 and 2027 earnings has moved higher to $3.72 and $4.13, respectively. The consensus estimates indicate 12.4% and 11% year-over-year growth for 2026 and 2027, respectively.
Image Source: Zacks Investment Research
Currently, Pagaya sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Pagaya Technologies Ltd. is my highest conviction GARP holding, rated Strong Buy, now representing 25% of my portfolio. PGY has transitioned from high growth but unprofitable to profitable, with six consecutive quarters of profitability and accelerating network volume. Q2 2026 results showed a network volume of $3.54B (vs. $2.97B estimate), +19% revenue, +99% adjusted net income, and -6% core operating expenses.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of PGY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
This AI Lender Has Big Upside Potential—And Big Risks Pagaya Technologies NASDAQ: PGY CFO Jonathan Dobres outlined the company’s growth strategy, funding model and profitability trajectory at the 46th Annual Canaccord Growth Conference, emphasizing expansion with existing lending partners as well as new partner additions.
Dobres described Pagaya as a technology platform that connects lending partners with institutional capital, using an AI-based decisioning engine to evaluate loans that are funded primarily off balance sheet. The company currently operates with about 35 lending partners across personal loans, auto lending and point-of-sale financing, with approximately $14 billion in annualized consumer loan volume, he said.
Get Pagaya Technologies alerts:
The Next Market Leaders? 5 Growth Stocks to Watch in 2026Pagaya reported net income of $45 million in the prior quarter, according to Dobres, and has increased net income in each of the past six quarters since becoming profitable. He said the company expects to exit the year with a $200 million GAAP net income run rate.
Growth Through Products and Partner Expansion Dobres said Pagaya’s growth is driven less by widening its credit criteria or increasing consumer marketing spending and more by adding lending partners, launching products and gaining access to a larger portion of partners’ application funnels.
5 Small-Cap Stocks With Impressive Growth and Upside PotentialEarlier in the year, Pagaya reduced or largely eliminated originations in its two riskiest credit tiers after identifying those lower-income borrower groups as potentially more exposed if consumer conditions weakened. Despite that step, the company continued to grow by accessing more applications through its lending partners, Dobres said.
In the second quarter, Pagaya’s total dollar value of applications exceeded $300 billion for the first time. Dobres said product-led growth was a contributor to the company’s 140% year-over-year auto growth.
In auto lending, Pagaya previously received applications that a partner had declined. The company now works with partners to identify borrowers whom the lender may technically approve but whose original offers may be less likely to convert. Pagaya can offer those borrowers different loan terms, potentially resulting in a funded loan under the partner’s name while allowing the partner to retain customer contact, servicing revenue and dealer relationships.
Dobres said this higher-funnel access has supported stronger borrower and collateral characteristics. In personal lending, he said Pagaya’s average borrower has about $120,000 in income and a FICO score in the 670-to-680 range. In auto lending, the average vehicle at loan inception is now about three years old with 30,000 miles, compared with vehicles that were roughly five to six years old with 60,000 miles two years earlier.
Pagaya has added five partners so far this year and expects to add three more before year-end, including two regional banks, Dobres said. New partners may take roughly 12 months to reach maturity, as integrations are completed and the company evaluates how its models perform with the new lending relationships.
Funding Mix and Institutional Demand On funding, Dobres said Pagaya’s current annualized funded-volume run rate is approximately $14 billion. Pre-funded securitizations account for about 60% of the company’s funding and provide roughly three to five months of visibility into future funding, he said.
Pagaya has more than 175 institutional investors with which it regularly engages, including asset managers, insurers and pension funds, according to Dobres. Over the prior three weeks, the company completed about $2 billion of oversubscribed securitizations, he said.
The company is also expanding its use of forward-flow arrangements, which provide six to 18 months of funding visibility, and longer-term revolving structures. Dobres said Pagaya is pursuing 12-to-24-month committed facilities in which it invests capital alongside banks and asset managers. While Pagaya may initially provide 3% to 5% of capital in such arrangements, the capital can be redeployed as the structure revolves over time.
“What we care about is diversity and commitment,” Dobres said, referring to long-term funding visibility.
Margins, Operating Leverage and Balance Sheet Dobres said Pagaya’s fee revenue less production costs, or FRLPC, reached a record level in the latest quarter. The company expects FRLPC to remain in a 4% to 5% range as a percentage of network volume, though it expects to operate at the lower end of that range for the rest of the year.
That lower-end positioning reflects the addition of newer partners and products, which initially generate lower margins before scaling, as well as the effect of higher benchmark rates on funding-side contributions, he said.
Still, Dobres said the company’s core operating expenses have remained approximately flat over the last six quarters, supporting operating leverage. He said FRLPC dollars convert to the bottom line at margins of roughly 90%, aided by Pagaya’s limited marketing spending.
Pagaya has about $1 billion in investments on its balance sheet, consisting of risk-retention and discretionary investments in securitization and other funding vehicles, Dobres said. About half of that amount is in equity portions of securitizations, while the other half consists of B and BB bond tranches that produce cash yields in the low- to mid-teens.
Dobres said the bond tranches have never missed a payment or been impaired in Pagaya’s history. The company’s net investment as a percentage of volume was about 2.4% over the last 12 months, he added.
About Pagaya Technologies (NASDAQ:PGY)Pagaya Technologies is a financial technology company that applies artificial intelligence and machine learning to the credit and asset management industries. Through its proprietary data-driven platform, Pagaya analyzes vast datasets from consumer credit portfolios to build predictive risk models, enabling institutional investors to gain access to alternative credit products. The company’s solutions streamline underwriting, optimize portfolio construction and facilitate the efficient securitization of consumer loans, credit card receivables and other asset classes.
Founded in 2016 and headquartered in New York, Pagaya has expanded its operations to serve financial institutions and asset managers primarily in the United States.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
Should You Invest $1,000 in Pagaya Technologies Right Now?Before you consider Pagaya Technologies, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Pagaya Technologies wasn't on the list.
While Pagaya Technologies currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Robotics and automation are rapidly becoming essential infrastructure across healthcare, manufacturing, logistics, and many other industries.
"Physical AI" is coming to the United States, and there are four ways that investors can gain exposure to this new robotics revolution. Plus, learn which seven companies are most positioned to benefit as intelligent robots enter the workforce.
Pagaya Technologies Ltd. (PGY - Free Report) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, PGY's 50-day simple moving average broke out above its 200-day moving average; this is known as a "golden cross."
A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages being the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.
Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb to higher prices.
A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
PGY has rallied 13.1% over the past four weeks, and the company is a #1 (Strong Buy) on the Zacks Rank at the moment. This combination indicates PGY could be poised for a breakout.
The bullish case only gets stronger once investors take into account PGY's positive earnings outlook for the current quarter. There have been 1 upward revision compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.
Given this move in earnings estimates and the positive technical factor, investors may want to keep their eye on PGY for more gains in the near future.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.
Zacks Premium includes access to the Zacks Style Scores as well.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Pagaya Technologies Ltd. (PGY - Free Report) Founded in 2016, Pagaya Technologies Ltd. operates primarily in the U.S., with corporate presence in New York and Tel-Aviv. The company applies proprietary artificial intelligence (AI) to improve credit decisioning and capital allocation across consumer finance. The platform connects lenders and institutional investors to expand access to financial products while targeting better risk-adjusted outcomes for capital providers.
PGY is a #1 (Strong Buy) on the Zacks Rank, with a VGM Score of A.
Additionally, the company could be a top pick for growth investors. PGY has a Growth Style Score of A, forecasting year-over-year earnings growth of 12.4% for the current fiscal year.
One analyst revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.49 to $3.72 per share. PGY boasts an average earnings surprise of +43.5%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, PGY should be on investors' short list.
Key Takeaways Pagaya gained 10.4% in a week after record revenues, stronger earnings and improving operating trends.Pagaya raised $3.7 billion across six ABS transactions and added 11 investors to its funding network.Higher funding costs, investment losses and partner concentration could limit further gains. Pagaya Technologies Ltd. (PGY - Free Report) shares gained 10.4% in the past week, putting the focus on whether the rebound can extend. The move comes after stronger second-quarter 2026 results and improving operating trends, but a one-week gain alone does not establish a specific catalyst.
The shares have also gained 18.3% in the past four weeks and 59.6% in the past 12 weeks. The broader advance raises a key question: Can improving profitability, deeper funding and partner momentum remain durable enough to support further gains?
3-Month Price Performance
Image Source: Zacks Investment Research
PGY’s Weekly Gain Raises the Sustainability QuestionPGY’s recent price performance is notable because it has occurred alongside firmer business trends. Still, the 10.4% one-week increase should be viewed as part of a larger rebound rather than proof that a particular event will drive the stock higher.
The key test is whether operating progress continues to support earnings. The investment case points to stronger profitability, partner momentum and improving funding depth as supports, while flagging macro, credit and concentration risks.
Pagaya’s Earnings Growth Supports the RallyPagaya reported record second-quarter revenue and other income of $387 million, up 19% year over year, while GAAP net income reached $45.3 million. Adjusted earnings per share came in at $1.07, above the Zacks Consensus Estimate of 71 cents.
The beat was not isolated. PGY topped earnings expectations in each of the trailing four quarters, with an average positive surprise of 43.5%.
Earnings Surprise History
Image Source: Zacks Investment Research
Analysts seem optimistic regarding PGY’s earnings growth prospects. The Zacks Consensus Estimate for the company’s 2026 and 2027 earnings increased by 15.2% and 11%, respectively over the past 30 days.
Estimate Revision Trend
Image Source: Zacks Investment Research
PGY’s Funding Depth Could Extend the UpsideFunding remains an important part of the sustainability argument. Pagaya raised a record $3.7 billion across six ABS transactions in the second quarter and added 11 investors, bringing its funding network to 174 investors.
The funding mix is also becoming more flexible, with 40% of funding coming through non-prefunded ABS products, alongside forward-flow and revolving structures. Amongst PGY’s key peers, Affirm Holdings, Inc. (AFRM - Free Report) uses technology, proprietary underwriting and third-party capital to support its pay-over-time platform, while Enova International, Inc. (ENVA - Free Report) operates an online lending platform powered by analytics and machine learning. Both AFRM and ENVA provide context for technology-driven consumer finance.
Pagaya’s Risks Could Limit Further GainsHigher benchmark rates remain a key risk because they can raise funding costs and pressure securitization economics. Pagaya’s FRLPC as a percentage of network volume fell 61 basis points year over year to 4.2% in the second quarter, partly because of tighter ABS pricing tied to higher cost of capital.
Investment volatility and concentration also warrant attention. Pagaya recorded an $80.3 million year-to-date loss on investments in the first half of 2026, while reliance on a limited number of partners creates network volume and revenue concentration risk. If funding costs remain elevated or partner execution weakens, revenue per unit of network volume could face pressure.
PGY’s Strong Rank Meets Mixed Style SignalsThe sustainability case remains constructive but not one-sided. Strong earnings growth, funding depth and partner expansion provide support, while FRLPC pressure and credit, investment and concentration risks could temper the upside.
PGY currently carries a Zacks Rank #1 (Strong Buy), with a Value Score of B, Growth Score of A, Momentum Score of B and VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Rank is designed to help assess expected stock performance over the next one to three months, while the Style Scores complement it by measuring value, growth and momentum characteristics. These signals are supportive context, but they do not make continued gains certain.
Key Takeaways Pagaya posted record Q2 revenues, net income, EBITDA and network volume, led by strong auto growth.Pagaya raised 2026 network volume, revenue, GAAP net income and adjusted EBITDA guidance.Funding expansion supports scaling, while execution, credit performance and FRLPC pressure remain risks. Pagaya Technologies Ltd. (PGY - Free Report) delivered a stronger-than-expected second quarter. Record network volume, revenues and GAAP net income, together with higher full-year guidance, raise the bar for the company’s 2026 performance.
The key event-driven question is whether Pagaya can sustain the operating leverage behind the latest results while managing funding-cost and credit risks.
Pagaya’s Record Q2 Results Set a Higher BarPagaya reported adjusted earnings of $1.07 per share in the second quarter, comfortably above the Zacks Consensus Estimate of 71 cents. GAAP net income attributable to Pagaya reached a record $45.3 million, up from $16.7 million a year earlier.
The beat was not isolated. PGY topped earnings expectations in each of the trailing four quarters, with an average positive surprise of 43.5%.
Earnings Surprise History
Image Source: Zacks Investment Research
Total revenue and other income reached a record $387 million, up 18.6% year over year, and exceeded the Zacks Consensus Estimate of $358.2 million. The company also reported record adjusted EBITDA of $124 million, up 43% year over year.
Network volume reached a record $3.54 billion, increasing 33.5% year over year. Growth was driven by the auto vertical while Pagaya maintained its focus on prudent underwriting. Revenue from fees less production costs, or FRLPC, reached a record $146.9 million, up 16.4% year over year.
The figures show that Pagaya is scaling across its lending network, with auto providing a major source of incremental volume while personal loans and point-of-sale financing remain part of the broader product strategy. The company’s investor presentation also highlighted 33% year-over-year total network-volume growth and 140% auto network-volume growth in the second quarter.
Supported by robust performance and strength in fundamentals, the company’s shares have gained 3.3% year to date, outperforming the industry’s 9.4% decline.
YTD Price Performance
Image Source: Zacks Investment Research
Pagaya’s Funding Growth Supports ScalingPagaya raised a record $3.7 billion of ABS funding across six transactions in the second quarter and added 11 investors. The final three transactions were upsized, and the company also added an Auto Forward Flow agreement. The funding activity points to continued demand for assets across the platform.
A broader funding base can support network-volume growth by giving Pagaya more flexibility across ABS, forward-flow and revolving structures. The company has also been expanding the number of institutional funding partners and diversifying funding channels. That matters because the ability to fund growing network volume is a key part of converting partner and product expansion into revenue.
PGY’s 40% of funding comes through non-prefunded ABS products, alongside forward-flow and revolving structures. Amongst PGY’s key peers, Affirm Holdings, Inc. (AFRM - Free Report) uses technology, proprietary underwriting and third-party capital to support its pay-over-time platform, while Enova International, Inc. (ENVA - Free Report) operates an online lending platform powered by analytics and machine learning. Both AFRM and ENVA provide context for technology-driven consumer finance.
PGY’s Higher Guidance Raises the 2026 StakesManagement now expects full-year 2026 network volume of $12.5-$13.25 billion, compared with the previous $11.45-$13 billion range. Total revenue and other income is projected at $1.425-$1.525 billion, versus the prior $1.4-$1.575 billion outlook.
The company also raised its full-year GAAP net income guidance to $155-$180 million from $110-$160 million and its adjusted EBITDA outlook to $460-$490 million from $420-$460 million. The higher targets reflect greater confidence in volume growth and operating leverage, but they also increase the importance of successful partner ramps and continued expense discipline.
The near-term outlook reinforces that higher expectations are not limited to the second quarter. Management expects third-quarter network volume of $3.425-$3.625 billion, revenue and other income of $370-$390 million, adjusted EBITDA of $120-$130 million and GAAP net income of $42-$52 million.
Supported by management’s higher guidance for key metrics, the Zacks Consensus Estimate for the company’s 2026 and 2027 earnings increased by 15.2% and 11%, respectively over the past 30 days.
Estimate Revision Trend
Image Source: Zacks Investment Research
Pagaya’s Rank and Style Scores Back the MomentumPGY currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Its Zacks Style Scores are a Value Score of B, Growth Score of A, Momentum Score of B and VGM Score of A. The Growth Score supports the company’s improving earnings profile, while the Value and Momentum Scores provide additional context for the stock’s setup.
The Zacks Style Scores are designed to complement the Zacks Rank by evaluating value, growth and momentum characteristics. The Style Score Education material notes that the individual scores measure different investment styles, while the VGM Score combines the weighted average of the three styles. For PGY, those signals support the stronger earnings setup, but they do not remove the execution risks associated with funding costs, credit performance and FRLPC pressure.
The key event-driven takeaway is therefore mixed but constructive. The second-quarter beat and higher guidance provide stronger evidence that Pagaya’s growth and operating-leverage strategy is working. Sustaining that trajectory will depend on continued network-volume expansion, funding availability and disciplined execution as the company moves toward its higher 2026 targets.
Pagaya continues its transformation into a deeply integrated player across the loan approval process, driving partner entrenchment and influence over loan quality. Q2 2026 saw record network volume of $3.5B (+33% YoY), with auto lending accounting for over 75% of growth and auto loan volume up 140% YoY. The company's profit and volume growth outpaced revenue, while operating expenses remained nearly flat, underscoring strong operating leverage and scalable technology.
Pagaya Technologies Ltd. (PGY - Free Report) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The upward trend in estimate revisions for this company reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Pagaya Technologies Ltd., as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate RevisionsThe company is expected to earn $0.97 per share for the current quarter, which represents a year-over-year change of -4.9%.
The Zacks Consensus Estimate for Pagaya Technologies Ltd. has increased 11.25% over the last 30 days, as one estimate has gone higher compared to no negative revisions.
Current-Year Estimate RevisionsFor the full year, the earnings estimate of $3.72 per share represents a change of +12.4% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Pagaya Technologies Ltd.. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 16.44%.
Favorable Zacks RankThe promising estimate revisions have helped Pagaya Technologies Ltd. earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom LineInvestors have been betting on Pagaya Technologies Ltd. because of its solid estimate revisions, as evident from the stock's 18.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
Shares of Pagaya Technologies Ltd. (PGY - Free Report) have gained 18.3% over the past four weeks to close the last trading session at $21.28, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $27.67 indicates a potential upside of 30%.
The average comprises 12 short-term price targets ranging from a low of $20.00 to a high of $36.00, with a standard deviation of $5.63. While the lowest estimate indicates a decline of 6% from the current price level, the most optimistic estimate points to a 69.2% upside. More than the range, one should note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.
However, an impressive consensus price target is not the only factor that indicates a potential upside in PGY. This view is strengthened by the agreement among analysts that the company will report better earnings than what they estimated earlier. Though a positive trend in earnings estimate revisions doesn't give any idea as to how much the stock could surge, it has proven effective in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Here's Why There Could be Plenty of Upside Left in PGYThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
The Zacks Consensus Estimate for the current year has increased 16.4% over the past month, as one estimate has gone higher compared to no negative revision.
Moreover, PGY currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much PGY could gain, the direction of price movement it implies does appear to be a good guide.
Empowered Funds LLC grew its position in shares of Pagaya Technologies Ltd. (NASDAQ:PGY – Free Report) by 4,562.7% during the first quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The fund owned 116,661 shares of the company’s stock after buying an additional 114,159 shares during the period. Empowered Funds LLC owned 0.14% of Pagaya Technologies worth $1,359,000 at the end of the most recent reporting period.
Other large investors also recently added to or reduced their stakes in the company. Main Management ETF Advisors LLC boosted its position in Pagaya Technologies by 1.0% during the fourth quarter. Main Management ETF Advisors LLC now owns 72,036 shares of the company’s stock worth $1,506,000 after purchasing an additional 736 shares during the period. The Manufacturers Life Insurance Company raised its position in shares of Pagaya Technologies by 5.4% in the first quarter. The Manufacturers Life Insurance Company now owns 15,136 shares of the company’s stock valued at $176,000 after purchasing an additional 776 shares during the period. SBI Securities Co. Ltd. lifted its stake in shares of Pagaya Technologies by 5.0% during the 4th quarter. SBI Securities Co. Ltd. now owns 16,493 shares of the company’s stock valued at $345,000 after buying an additional 790 shares in the last quarter. MetLife Investment Management LLC boosted its holdings in Pagaya Technologies by 3.2% in the 4th quarter. MetLife Investment Management LLC now owns 27,845 shares of the company’s stock worth $582,000 after buying an additional 867 shares during the period. Finally, Franklin Resources Inc. boosted its holdings in Pagaya Technologies by 4.8% in the 3rd quarter. Franklin Resources Inc. now owns 22,766 shares of the company’s stock worth $676,000 after buying an additional 1,043 shares during the period. Hedge funds and other institutional investors own 57.14% of the company’s stock.
Insider Transactions at Pagaya Technologies In other news, CAO Cory Vieira sold 2,140 shares of Pagaya Technologies stock in a transaction dated Tuesday, June 2nd. The stock was sold at an average price of $15.01, for a total transaction of $32,121.40. Following the completion of the sale, the chief accounting officer owned 18,179 shares in the company, valued at approximately $272,866.79. This trade represents a 10.53% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Gal Krubiner acquired 16,230 shares of the business’s stock in a transaction dated Wednesday, June 24th. The shares were acquired at an average cost of $15.43 per share, with a total value of $250,428.90. Following the acquisition, the chief executive officer directly owned 555,906 shares of the company’s stock, valued at $8,577,629.58. This represents a 3.01% increase in their position. The SEC filing for this purchase provides additional information. Over the last quarter, insiders have sold 107,560 shares of company stock worth $2,011,541. 41.99% of the stock is owned by insiders.
Analyst Upgrades and Downgrades A number of equities research analysts have issued reports on PGY shares. Citizens Jmp boosted their target price on shares of Pagaya Technologies from $22.00 to $25.00 and gave the company a “market outperform” rating in a report on Friday, July 31st. B. Riley Financial lifted their price target on Pagaya Technologies from $32.00 to $36.00 and gave the company a “buy” rating in a research report on Friday, July 31st. Weiss Ratings raised Pagaya Technologies from a “sell (d+)” rating to a “hold (c-)” rating in a report on Thursday, June 18th. Texas Capital upgraded Pagaya Technologies to a “strong-buy” rating in a research note on Wednesday, June 10th. Finally, Canaccord Genuity Group lifted their target price on Pagaya Technologies from $32.00 to $36.00 and gave the company a “buy” rating in a report on Friday, July 31st. Two research analysts have rated the stock with a Strong Buy rating, seven have assigned a Buy rating and two have given a Hold rating to the company’s stock. According to MarketBeat, Pagaya Technologies presently has a consensus rating of “Buy” and a consensus target price of $32.43.
Get Our Latest Stock Report on PGY
Pagaya Technologies Trading Down 0.7% Pagaya Technologies stock opened at $21.28 on Friday. The stock has a market cap of $1.76 billion, a P/E ratio of 15.65 and a beta of 5.33. Pagaya Technologies Ltd. has a fifty-two week low of $10.40 and a fifty-two week high of $44.99. The firm’s fifty day moving average price is $17.03 and its 200-day moving average price is $14.96. The company has a debt-to-equity ratio of 1.12, a quick ratio of 11.08 and a current ratio of 11.08.
Pagaya Technologies (NASDAQ:PGY – Get Free Report) last posted its quarterly earnings data on Thursday, May 7th. The company reported $0.73 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.20 by $0.53. The company had revenue of $317.94 million during the quarter, compared to analyst estimates of $323.85 million. Pagaya Technologies had a return on equity of 51.56% and a net margin of 9.12%.The firm’s quarterly revenue was up 9.7% on a year-over-year basis. During the same quarter last year, the company earned $0.10 earnings per share. Equities research analysts forecast that Pagaya Technologies Ltd. will post 3.4 earnings per share for the current fiscal year.
Pagaya Technologies Company Profile (Free Report)
Pagaya Technologies is a financial technology company that applies artificial intelligence and machine learning to the credit and asset management industries. Through its proprietary data-driven platform, Pagaya analyzes vast datasets from consumer credit portfolios to build predictive risk models, enabling institutional investors to gain access to alternative credit products. The company’s solutions streamline underwriting, optimize portfolio construction and facilitate the efficient securitization of consumer loans, credit card receivables and other asset classes.
Founded in 2016 and headquartered in New York, Pagaya has expanded its operations to serve financial institutions and asset managers primarily in the United States.
Featured Articles Five stocks we like better than Pagaya Technologies Quantum Earnings Week: Winners and Losers Are Finally Emerging Axon’s Post-Earnings Pullback May Be More About Valuation Than Growth Uber Stock Lags in 2026, But Cash Flow and AV Bets Fuel Upside AppLovin Stock Hits 52-Week Low as Analysts Trim Targets, Stay Bullish
Receive News & Ratings for Pagaya Technologies Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Pagaya Technologies and related companies with MarketBeat.com's FREE daily email newsletter.
« PREVIOUS HEADLINECalifornia State Teachers Retirement System Acquires 13,393 Shares of WesBanco, Inc. $WSBC
NEXT HEADLINE »Loar Holdings Inc. $LOAR Shares Bought by Empowered Funds LLC
Key Takeaways Pagaya beat Q2 EPS and revenue estimates as network volume hit a record $3.5B, up 33% y/y.PGY said that auto drove more than three-quarters of the year-over-year network volume increase.Pagaya raised its 2026 GAAP net income view to $155-$180M while maintaining its underwriting posture. Pagaya Technologies Ltd. (PGY - Free Report) used its second-quarter 2026 earnings call to emphasize accelerating partner-led growth, especially in auto, while maintaining its underwriting posture. Management also raised its full-year GAAP net income guidance after record network volume and profitability.
Non-GAAP earnings per share of $1.07 beat the Zacks Consensus Estimate of $0.71. Total revenues of $387 million surpassed the consensus estimate of $358.2 million.
PGY Auto Flywheel Drives Volume GrowthCEO Gal Krubiner said that Pagaya’s growth reflected its partner-focused strategy, with network volume reaching a record $3.5 billion, up 33% year over year. Auto accounted for more than three-quarters of the year-over-year increase.
President Sanjiv Das said that dynamic offer optimization allows partners to adjust loan amount, APR, down payment and term in real time, helping lenders make more competitive offers at the dealer desk.
A Jefferies analyst asked why auto was accelerating. President Sanjiv Das cited product optimization, closer alignment with market terms and access to application flow that partners previously kept for themselves.
Pagaya Expands Through Partners & ProductsDas said that Pagaya is onboarding about seven partners across personal loans, auto and point of sale, with regional banks gaining importance in the personal-loan pipeline.
Das added that the Affiliate Optimizer product generated more than $1 billion in personal-loan network volume in the second quarter. Pagaya also expects additional personal-loan partners to join Experian Activate and several new partners to go live in the second half.
Krubiner said that the embedded platform is designed to scale products across existing partners with limited incremental investment, allowing new product capabilities to be replicated throughout the network.
PGY Raises Net Income OutlookCFO Jonathan Dobres said that Pagaya raised its full-year GAAP net income guidance by about 25% at the mid-point. The new guidance is $155-$180 million.
For the third quarter, CFO Jonathan Dobres guided network volume of $3.43-$3.63 billion, total revenues and other income to $370-$390 million, adjusted EBITDA to $120-$130 million, and GAAP net income to $42-$52 million.
For 2026, management expects network volume of $12.5-$13.25 billion, revenues of $1.43-$1.53 billion and adjusted EBITDA of $460-$490 million.
Pagaya Defends Underwriting DisciplineA Stephens analyst asked whether faster growth reflected looser underwriting. CEO Krubiner said that the company’s underwriting posture has not changed and attributed growth primarily to new products and deeper partner integration.
President Das said that more than 45% of application flow now comes from non-decline channels as Pagaya moves further up partners’ lending funnels.
Das said that the average personal-loan borrower has about $120,000 of income, a 680 FICO score and a 28% debt-to-income ratio. CFO Jonathan Dobres added that 2025 and 2026 vintages are performing in line with underwriting expectations.
PGY Funding Mix Supports ScaleDas said that Pagaya completed a record $3.7 billion in ABS funding across six transactions, while its last three securitizations were upsized amid investor demand.
CFO Jonathan Dobres said that about 40% of flow now comes from non-prefunded ABS products. The funding mix includes forward flow, committed revolving structures and traditional prefunded ABS.
A Canaccord Genuity analyst asked about forward-flow conditions. CFO Jonathan Dobres said that funding channels are more diversified and committed than before, with forward flow remaining one part of a broader funding strategy.
Pagaya’s Focus After Q2Krubiner kept the strategic focus on extending more products across more partners while preserving operating leverage. Core operating expenses declined 6% year over year even as network volume expanded.
Dobres informed that core operating expenses are already sized for significant growth. Management’s posture coming out of the second quarter centers on scaling the existing platform, maintaining credit discipline and broadening committed funding sources.
PGY Zacks Signals Favor Value & GrowthPGY currently carries a Zacks Rank #3 (Hold), with Value and Growth Scores of A, a Momentum Score of D and a VGM Score of A. The profile combines strong value and growth characteristics with weaker momentum. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Under the Zacks framework, A and B Style Scores are more favorable, while the strongest combinations generally pair those grades with a Zacks Rank #1 or #2 (Buy). PGY’s Zacks Rank can change as earnings estimates are revised after the just-reported results.
NEW YORK--(BUSINESS WIRE)-- #creditratingagency--KBRA assigns preliminary ratings to 10 classes of notes issued by Pagaya AI Debt Grantor Trust 2026-R3 and Pagaya AI Debt Trust 2026-R3, collectively “PAID 2026-R3,” an unsecured consumer loan ABS transaction. PAID 2026-R3 has initial hard credit enhancement levels ranging from 63.60% for the Class A Notes to 8.45% for the Class F Notes. Credit enhancement is comprised of overcollateralization, subordination, except for the Class F Notes, cash reserve accounts funded.
Key Takeaways PGY beat Q2 earnings estimates as record revenues and network volume lifted quarterly results.Pagaya posted record $387M in revenues and $3.54B in network volume, led by interest income and auto growth.PGY raised its 2026 outlook for network volume, GAAP net income and adjusted EBITDA. Shares of Pagaya Technologies (PGY - Free Report) have gained almost 19% since the release of its second-quarter 2026 results on July 30. Quarterly adjusted earnings per share of $1.07 comfortably surpassed the Zacks Consensus Estimate of 71 cents. The bottom line improved 67.2% from the prior-year quarter.
Results were aided by record performance across key metrics. The company recorded an improvement in total revenues, which, along with growth in network volumes, primarily supported the results. An increase in expenses hurt the results to some extent.
Net income attributable to Pagaya (GAAP basis) was a record $45.3 million, up significantly from $16.7 million in the prior-year quarter.
PGY’s Revenues Improve, Expenses RiseTotal revenues and other income were a record $387 million, up 18.6% year over year. The increase was driven by a rise in interest income and revenues from fees. A decline in net investment loss also supported the rise. The top line surpassed the Zacks Consensus Estimate of $358.2 million.
Total costs and operating expenses increased 4.2% year over year to $281.2 million. The rise was due to higher production costs.
In the second quarter, network volume was a record $3.54 billion, which grew 33.5% year over year, driven by growth in the company’s auto vertical, while maintaining focus on prudent underwriting.
Revenue from fees less production costs (FRLPC) was a record $146.9 million, which increased 16.4% year over year.
FRLPC as a percentage of network volume contracted by 60 basis points (bps) year over year to 4.2%, driven by asset class mix, new partner and product contributions, and tighter pricing on the asset-backed securities (ABS) transactions reflecting higher cost of capital in light of market conditions.
PGY’s Balance Sheet SolidAs of June 30, 2026, total assets were $1.69 billion, up 9.5% from Dec. 31, 2025.
Long-term debt was $471.9 million and shareholders’ equity was $594.2 million.
In the second quarter, the company raised a record $3.7 billion in ABS funding across six transactions.
PGY Management’s OutlookQ3Management expects network volume of $3.425-$3.625 billion.
Total revenues are expected between $370 million and $390 million.
The adjusted EBITDA is expected to be $120-$130 million and GAAP net income is anticipated to be $42-$52 million.
2026The company raised its 2026 outlook.
Network volume of $12.5-$13.25 billion is expected, changed from the previously mentioned $11.45-$13 billion.
Total revenues are projected to be $1.425-$1.525 billion, changed from the previous $1.4-$1.575 billion.
Management raised its full-year net income guidance as well. It expects GAAP net income of $155-180 million, up from the previously mentioned $110-$160 million. Similarly, adjusted EBITDA is expected to be $460-$490 million, up from the previously stated $420-$460 million.
Our Take on PagayaSecular growth in embedded credit, rising efficiency, diversified funding sources and broader multi-product adoption will likely continue to drive Pagaya’s scalable and profitable expansion in the near term. However, uncertainty around the single-family rental strategy might limit the company’s near-term volumes.
Currently, PGY carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Expected Earnings Release of PGY’s PeersLendingTree, Inc. (TREE - Free Report) reported second-quarter 2026 adjusted net income per share of $1.27, which missed the Zacks Consensus Estimate of $1.46. The figure compares favorably with $1.13 in the prior-year quarter.
TREE’s results were affected by a decline in Consumer segment revenues and higher total costs. However, growth in revenues and adjusted EBITDA, along with strong Insurance segment performance, supported the results to some extent.
Upstart Holdings, Inc. (UPST - Free Report) is scheduled to report quarterly results on Aug. 4.
The Zacks Consensus Estimate for UPST’s quarterly earnings has been unchanged at 58 cents over the past week. The figure indicates 61.1% growth from the prior-year quarter’s actual.
Key Takeaways Pagaya delivered record $6.2B first-half network volume, with revenues rising 14.4% y/y to $705M.PGY expanded lending partnerships and funding, supporting record loan volumes and profitability.Pagaya raised full-year GAAP net income and adjusted EBITDA outlook after strong 2Q26 results. Pagaya Technologies (PGY - Free Report) delivered a strong first half of 2026, driven by record lending activity, robust revenue growth and expanding profitability. In the six months ended June 30, 2026, network volume surged 22% year over year to a record $6.2 billion, while total revenues jumped 14.4% to $705 million.
In the second quarter alone, adjusted earnings per share came in at $1.07, rising 67.2% from the year-ago quarter. In the six months ended June 30, 2026, the company generated GAAP net income of $70 million and adjusted EBITDA of $217.7 million, reflecting improving operating leverage.
PGY’s robust performance was primarily fueled by sustained growth across its AI-powered lending network. The company continued to deepen relationships with existing lending partners while onboarding new ones, resulting in higher loan originations across auto lending, point-of-sale (POS) financing and personal loans.
Another key contributor has been the company’s diversified funding platform. Pagaya completed multiple oversubscribed asset-backed securities (ABS) transactions during the first half, including its first RPM resecuritization and first AAA-rated PAID resecuritization, while issuing more than $2 billion of ABS in the first quarter alone. The continued ability to access institutional capital at scale enabled the company to fund record loan volumes while demonstrating investor confidence in the quality of its underlying assets.
Management’s confidence in the business outlook was reflected in its raised full-year guidance following the first quarter and continued optimism after the second quarter. Following its impressive second-quarter results, management expects full-year GAAP net income of $155-180 million and adjusted EBITDA of $460-$490 million. With a growing pipeline of lending partners, increasing network adoption, disciplined underwriting and a highly scalable operating model, Pagaya expects to maintain profitable growth through the remainder of 2026.
1H26 Performance of Pagaya’s PeersLet us see how PGY’s two key peers, LendingTree (TREE - Free Report) and Upstart Holdings, Inc. (UPST - Free Report) , performed this year.
LendingTree’s first-half 2026 net income per share of $1.90 compared favorably with a loss of 26 cents in the prior-year period. The company reported total revenues of $640.7 million in the first six months of this year, up 30.8% year over year, driven by continued solid performance of the Insurance segment. Total costs increased 23.5% year over year to $587.8 million.
Now, LendingTree expects 2026 revenues of $1.30-$1.32 billion and variable marketing margin of $364-$374 million. TREE expects adjusted EBITDA of $145-$152 million in 2026.
Upstart is scheduled to report second-quarter 2026 results on Aug. 4. In the first quarter of this year, UPST reported revenues of $308 million, up 44% year over year. Revenues from fees were $277 million, up 49% year over year, with platform/referral fees of $224.6 million and servicing/other fees of $52.4 million.
In the first quarter, core personal loans held up against typical seasonality, while secured products scaled rapidly. Auto originations rose more than 300% year over year and grew sequentially on dealer network expansion and product improvements. However, Upstart’s GAAP net loss widened to $6.6 million from a net loss of $2.4 million in the year-ago period.
PGY’s Price Performance, Valuation & Estimate AnalysisPagaya’s shares have gained 4% in the past six months compared with the industry’s 6% decline.
Image Source: Zacks Investment Research
The PGY stock is currently trading at a 12-month forward price-to-sales (P/S) of 1.01X, which is below the industry average of 2.78X.
Image Source: Zacks Investment Research
Over the past 30 days, the Zacks Consensus Estimate for PGY’s 2026 and 2027 earnings has been unchanged at $3.23 and $3.72, respectively. The consensus estimate indicates a 2.4% decline for 2026 and 15.2% growth for 2027.
Image Source: Zacks Investment Research
Currently, Pagaya carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This AI Lender Has Big Upside Potential—And Big Risks Pagaya Technologies NASDAQ: PGY reported record second-quarter results, with growth in auto lending and personal loans helping drive higher network volume, revenue, profitability and earnings per share. Management raised its full-year GAAP net income outlook by about 25% at the midpoint, citing visibility into the remainder of 2026 and continued operating leverage.
Chief Executive Officer Gal Krubiner said every major component of the company’s business model reached a record during the quarter, including network volume, fee revenue less production costs, adjusted EBITDA and earnings per share. He said Pagaya’s costs remained largely flat as volume grew, contributing to bottom-line gains.
Get Pagaya Technologies alerts:
Record Volume and Profitability The Next Market Leaders? 5 Growth Stocks to Watch in 2026Network volume increased 33% year over year to a record $3.5 billion, according to Chief Financial Officer Jon Dobres. Total revenue rose 19% to $387 million, while fee revenue less production costs, or FRLPC, increased 16% to $147 million.
Pagaya reported GAAP operating income of $106 million, up 87% from a year earlier. Adjusted EBITDA rose 43% to $124 million, producing a 32% margin, up five percentage points year over year. GAAP net income was $45 million, compared with $16 million a year earlier, and quarterly GAAP earnings per share reached a record $0.49.
5 Small-Cap Stocks With Impressive Growth and Upside PotentialDobres said core operating expenses declined 6% year over year and were lower sequentially, despite the increase in volume. Core operating expenses represented 31% of FRLPC, an eight-point improvement from the prior year.
FRLPC as a percentage of network volume declined about 60 basis points sequentially to 4.2%. Dobres attributed the change to product and partner mix, as newer products and partners enter at lower initial margins, as well as elevated benchmark rates that pressure funding-related margins. Management expects FRLPC as a percentage of volume to be between 4% and 5% for the rest of 2026.
Auto Growth Drives Network Expansion President Sanjiv Das said auto lending accounted for more than three-quarters of Pagaya’s year-over-year network-volume growth. Application volume increased 29% from a year earlier, while application-to-volume conversion remained at roughly 1%.
Das said the company’s auto product has been expanded to provide dynamically optimized offers at the dealership. Rather than offering a single loan structure, Pagaya can adjust variables such as down payment, annual percentage rate, loan-to-value ratio and loan term to offer borrowers multiple potential structures.
Management said the approach is intended to help lending partners remain competitive at dealerships, where Das said approximately 83% of auto loans close. Pagaya said it is connected to more than 40% of the U.S. auto market.
Krubiner said growth also resulted from access to additional loan flow from partners, including applications that may previously have remained with lenders. He described the strategy as product-led growth, in which a product developed for one partner can be deployed more broadly across the network.
Personal loans also remained a major business line. Das said Pagaya’s Affiliate Optimizer Engine contributed more than $1 billion in network volume during the quarter. The company expects to add more personal-loan partners to Experian Activate this year and said it expects several new partners, including regional banks, to go live in the second half.
Point-of-Sale and Funding Developments Management said point-of-sale volume is expected to decline later in the year because one POS partner is rolling off. Dobres said that partner had little effect on FRLPC margins, and the company expects volume to ramp again as it scales newer POS relationships. Das cited existing relationships with Sezzle, Flex Pay and Upgrade, along with discussions around areas such as home-improvement loans and purchase financing.
On the funding side, Pagaya raised $3.7 billion during the quarter and completed six asset-backed securitization transactions, including its largest auto securitization, totaling $600 million. The company added 11 investors, bringing its investor network to 174, and said its last three securitizations were upsized.
Dobres said approximately 40% of current flow comes from funding channels other than pre-funded ABS transactions. The company continues to use forward-flow arrangements, longer-term revolving structures and other committed capital sources to diversify its funding.
As of June 30, Pagaya held $249 million in unrestricted cash and cash equivalents and $1.04 billion in investments in loans and securities. About 50% of its investments were in bond tranches, compared with less than 30% in 2025, according to Dobres. The investment portfolio was adjusted downward by $42 million during the quarter, while the company added $118 million of new investments net of prior-deal paydowns.
Updated 2026 Outlook For the third quarter, Pagaya expects network volume of $3.425 billion to $3.625 billion, total revenue and other income of $370 million to $390 million, adjusted EBITDA of $120 million to $130 million, and GAAP net income of $42 million to $52 million.
For the full year, the company now expects:
Network volume of $12.5 billion to $13.25 billion; Total revenue of $1.425 billion to $1.525 billion; Adjusted EBITDA of $460 million to $490 million; and GAAP net income of $155 million to $180 million. Management said underwriting standards have not changed. Krubiner said Pagaya continues to monitor credit conditions and adjust pricing and risk selection as needed. Das said the company had previously reduced exposure to its highest-risk tiers and characterized the current borrower profile in personal loans as having average income of about $120,000, an average FICO score of roughly 680, 37% homeownership and an average debt-to-income ratio of approximately 28%.
Dobres said Pagaya does not anticipate significant acquisitions in its near-term outlook, though the company continues to assess opportunities and views bond purchases as an attractive use of capital.
About Pagaya Technologies (NASDAQ:PGY)Pagaya Technologies is a financial technology company that applies artificial intelligence and machine learning to the credit and asset management industries. Through its proprietary data-driven platform, Pagaya analyzes vast datasets from consumer credit portfolios to build predictive risk models, enabling institutional investors to gain access to alternative credit products. The company’s solutions streamline underwriting, optimize portfolio construction and facilitate the efficient securitization of consumer loans, credit card receivables and other asset classes.
Founded in 2016 and headquartered in New York, Pagaya has expanded its operations to serve financial institutions and asset managers primarily in the United States.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Should You Invest $1,000 in Pagaya Technologies Right Now?Before you consider Pagaya Technologies, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Pagaya Technologies wasn't on the list.
While Pagaya Technologies currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The AI wave will soon hit public markets with Anthropic and OpenAI set to go public later this year. However, you don't have to wait to invest. This report shows seven AI stocks that you can buy today while the big model providers get ready to go public.
Pagaya’s AI lending flywheel is scaling despite thinner unit economics: Network volume jumped 33% to a record $3.5 billion, while adjusted EBITDA rose 43% and margins expanded—even as its take rate declined.
Distribution, not underwriting alone, is becoming the competitive moat: Pagaya is embedding deeper into lender workflows, reaching roughly 40% of the U.S. auto market and evaluating borrowers earlier in the dealership financing process.
The model turns AI into asset-light lending infrastructure: Banks can approve more borrowers without adding equivalent balance-sheet risk, while Pagaya connects loan supply to institutional capital through a growing securitization network.
Pagaya Technologies’ second-quarter results demonstrated that an artificial intelligence (AI) lending network can generate sharply higher profits even as it earns less on each dollar moving through the system.
“Our record quarter reflects a flywheel that is clearly working: partners are sending more volume, adopting more products, and our network effects compound with every relationship we add,” said Gal Krubiner, CEO and co-founder, on Thursday’s (July 30) investor earnings call.
Network volume rose 33% year over year to a record $3.5 billion, beating Pagaya’s outlook. Total revenue and other income increased 19% to $387 million, while adjusted EBITDA climbed 43% to roughly $124 million. GAAP net income attributable to shareholders reached $45 million, up from about $17 million a year earlier.
At the same time, fee revenue less production costs as a share of network volume fell to 4.2% from 4.8%. Pagaya attributed the compression to asset mix, newer partners and products, and tighter pricing on asset-backed securities amid elevated capital costs.
Executives stressed to investors on the call that Pagaya’s AI advantage is becoming less about underwriting alone and more about orchestration: embedding inside lender workflows, expanding distribution and matching loan supply with institutional capital at scale.
See also: The Middle Market CFO’s Guide to Big Tech’s Open-Weight AI Debate
Pagaya’s AI Lending Flywheel Is Growing Faster Even as Its Take Rate Shrinks CEO and Co-Founder Krubiner said the company’s flywheel is accelerating as existing partners send more volume, adopt more products and increase the value of Pagaya’s network with each added relationship.
The model differs from conventional lending growth. Pagaya does not need to acquire every borrower directly or finance every loan with its own balance sheet. It grows when banks and other lenders route more applications through its infrastructure and use the platform across a wider portion of their credit operations.
Pagaya completed six asset-backed securitizations totaling a record $3.7 billion during the quarter. The final three deals were upsized, and the company added another Auto forward-flow agreement.
Company leadership said Pagaya is advancing further up its partners’ lending funnels, helping them operate as “full spectrum lenders.” Annualized Auto network volume reached a record $4.8 billion during the quarter.
The company may be more asset-light than a traditional lender, but it remains exposed to credit performance, funding costs and securitization demand.
See more: Pagaya Issues $300 Million in Bonds to Fund BNPL Loans
Auto Industry Is Becoming Pagaya’s Distribution Engine Auto drove much of the company’s network-volume growth. During the earnings presentation, management said Pagaya’s connected dealership network now reaches roughly 40% of the U.S. auto market. It also highlighted greater use of “first-look” and “dual-look” channels, allowing its models to assess borrowers earlier in the financing process.
That expands the addressable market while reducing dependence on declined-loan traffic.
For dealers, broader approval capacity can help convert more shoppers into buyers. For lenders, Pagaya can increase coverage without forcing a wholesale replacement of internal underwriting systems. For Pagaya, each integration creates more application flow and more opportunities to introduce additional products.
The advantage is therefore not simply a better credit model. Predictive tools are increasingly available across the industry. The more defensible asset is the network connecting lenders, dealerships and institutional investors.
The most persuasive evidence for Pagaya’s model appeared in its cost structure. Adjusted EBITDA margin expanded to 32% from 26%. Core operating expenses declined to 31% of fee revenue less production costs, compared with 39% a year earlier. That is the financial test facing many AI platforms. Models can improve productivity, but durable value emerges only when incremental activity grows faster than the expense base supporting it.
Pagaya increased its full-year GAAP net income outlook to between $155 million and $180 million. It also expects network volume of $12.5 billion to $13.25 billion and adjusted EBITDA of $460 million to $490 million. The next test is whether the company can sustain that equation through less favorable credit and capital-market conditions.
Pagaya Technologies Ltd. (NASDAQ:PGY) shares are trading higher Thursday after the company reported second-quarter earnings.
Pagaya shares are climbing with conviction. Why is PGY stock up today? Pagaya Beats Estimates with Strong GrowthPagaya reported adjusted earnings per share of $1.07, beating the consensus estimate of 33 cents. In addition, it reported revenue of $365.63 million, beating the consensus estimate of $356.02 million.
Network volume reached a record $3.5 billion, up 33% year-over-year, driven by growth in the company’s Auto vertical.
Fitch revised Pagaya’s corporate rating outlook to Positive, citing improvements in profitability, leverage, and interest coverage.
“Our record quarter reflects a flywheel that is clearly working: partners are sending more volume, adopting more products, and our network effects compound with every relationship we add,” said Gal Krubiner, CEO and Co-Founder of Pagaya.
Narrows FY GuidancePagaya sees third-quarter revenue of between $370.00 million and $390.00 million, versus the consensus estimate of $394.67 million. Furthermore, it narrowed its fiscal-year revenue guidance from between $1.40 billion and $1.57 billion to between $1.42 billion and $1.52 billion, versus the consensus estimate of $1.47 billion.
Pagaya Shares Race HigherPGY Price Action: At the time of publication, Pagaya shares are trading 11.18% higher at $18.00, according to data from Benzinga Pro.
This illustration was generated using artificial intelligence via Midjourney.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Market News and Data brought to you by Benzinga APIs
Pagaya Technologies Ltd. (PGY - Free Report) came out with quarterly earnings of $1.07 per share, beating the Zacks Consensus Estimate of $0.71 per share. This compares to earnings of $0.64 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +50.70%. A quarter ago, it was expected that this company would post earnings of $0.48 per share when it actually produced earnings of $0.73, delivering a surprise of +52.08%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Pagaya Technologies Ltd., which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $387.04 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 8.07%. This compares to year-ago revenues of $326.4 million. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Pagaya Technologies Ltd. shares have lost about 22.5% since the beginning of the year versus the S&P 500's gain of 6.9%.
What's Next for Pagaya Technologies Ltd.?While Pagaya Technologies Ltd. has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Pagaya Technologies Ltd. was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.88 on $397.85 million in revenues for the coming quarter and $3.23 on $1.48 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
One other stock from the same industry, Riot Platforms, Inc. (RIOT - Free Report) , is yet to report results for the quarter ended June 2026. The results are expected to be released on August 5.
This company is expected to post quarterly loss of $0.39 per share in its upcoming report, which represents a year-over-year change of -168.4%. The consensus EPS estimate for the quarter has been revised 13.7% lower over the last 30 days to the current level.
Riot Platforms, Inc.'s revenues are expected to be $150.47 million, down 1.7% from the year-ago quarter.
NEW YORK & TEL AVIV, Israel--(BUSINESS WIRE)--Pagaya Technologies Ltd. (NASDAQ: PGY) (“Pagaya”, the “Company” or “we”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced financial results for the second quarter 2026. For additional information, view Pagaya's second quarter 2026 letter to shareholders here. “Our record quarter reflects a flywheel that is clearly working: partners are sending more volume, adopting more products, and ou.
Key Takeaways Pagaya trades below industry and peers on P/S and P/TB metrics despite improving profitability.PGY's AI-powered platform and capital-light funding model support resilience across lending cycles.PGY faces rising production costs, while unchanged earnings estimates may limit near-term upside. Pagaya Technologies (PGY - Free Report) appears attractively valued based on two widely used valuation metrics: price-to-sales (P/S) and price-to-tangible book (P/TB). Value investors often seek companies trading below their intrinsic worth or at a discount to peers, and PGY currently fits that profile.
The stock trades at a forward 12-month P/S ratio of 0.86X, significantly below the industry average of 2.78X. Moreover, as shown in the chart below, PGY’s current forward P/S multiple is well below its three-year peak, indicating that the stock is trading at a discount to its historical valuation.
PGY P/S (F12M)
Image Source: Zacks Investment Research
PGY also looks inexpensive on a tangible book basis. Its trailing 12-month P/TB ratio stands at 2.82X compared with the industry average of 3.99X.
PGY P/TB (TTM)
Image Source: Zacks Investment Research
The company’s valuation remains compelling even when compared with close peers. Upstart Holdings (UPST - Free Report) trades at a forward 12-month P/S ratio of 1.59X, whereas Virtu Financial (VIRT - Free Report) trades at 3.64X, both well above PGY’s 0.86X. Similarly, PGY’s P/TB TTM ratio of 2.82X is lower than Upstart’s 4.05X and Virtu Financial’s 5.59X.
Taken together, these valuation metrics suggest that Pagaya is trading at a meaningful discount relative to both its industry and key peers, leaving room for potential upside if the market reassesses the company’s value.
However, valuation alone does not make a compelling investment case. Investors should also evaluate Pagaya’s underlying fundamentals, earnings trajectory and long-term growth prospects before making an investment decision.
Key Factors Supporting PagayaDiversified AI-Powered Lending Platform: PGY’s core strength has been its resilient and adaptable business model. The company has transformed itself from a personal loan-focused platform into a diversified lending technology company with exposure across personal loans, auto lending and point-of-sale (POS) financing. This broader product mix reduces reliance on any single lending category, making revenue generation more resilient across economic and credit cycles.
At the same time, the company’s proprietary AI-powered technology has strengthened its competitive advantage. Its pre-screen solution enables banks and lenders to identify creditworthy existing customers and extend pre-approved loan offers without requiring a formal application. This not only expands credit access but also helps lending partners increase customer engagement and wallet share while keeping customer acquisition costs low.
Capital-Light Funding Model: Unlike traditional lenders, Pagaya follows an asset-light business model and generally does not retain loans on its balance sheet. Instead, loans originated through its AI-powered network are quickly transferred to institutional investors through asset-backed securities (ABS) and forward flow agreements.
Supported by a network of more than 160 institutional funding partners, this funding model provides a diversified and dependable source of capital while reducing reliance on public securitization markets.
By keeping credit exposure low and limiting balance-sheet risk, Pagaya has maintained financial flexibility and liquidity even during periods of elevated interest rates and volatile capital markets.
Improving Profitability: Pagaya has been translating strong revenue growth into improving profitability through higher operating leverage and disciplined cost management. As transaction volumes and monetization increased in 2025, revenues grew faster than operating expenses, driving margin expansion, a sharp increase in adjusted EBITDA and a return to sustained GAAP profitability.
This momentum continued into the first quarter of 2026, supported by continued expense discipline and solid performance across the personal loan and auto lending businesses. Reflecting confidence in its scalable platform and profitability trajectory, management expects 2026 GAAP net income of $110-$160 million.
Analyzing PGY’s Price PerformanceDespite improving fundamentals, PGY shares have declined 20.5% year to date, underperforming both the industry and the broader market. The industry has lost 10.9%, while the S&P 500 Index has returned 7.8%. The disconnect between operating performance and stock price suggests that investors remain cautious toward the fintech sector despite Pagaya’s improving profitability.
The performance of PGY has been better than that of Upstart but worse than Virtu Financial. Upstart shares have lost 36.4%, while the VIRT stock has appreciated 76.1% year to date.
PGY’s YTD Price Performance
Image Source: Zacks Investment Research
How to Approach the Pagaya Stock?Given its resilient business model and capital-efficient funding strategy, PGY continues to stand out in the fintech space. Its AI-driven platform and reliance on forward flow agreements shield it from market volatility and credit risks.
Moreover, the stock trades at a discount relative to peers like UPST and Virtu Financial, making its valuation attractive.
However, the company has been witnessing a persistent increase in expenses over the past few years. Over the last three years (2022-2025), total costs and operating expenses saw a compound annual growth rate of 1.2%, mainly because of elevated production costs. Since production costs are highly correlated to the company’s network volume, the metric is anticipated to keep increasing in the near term as the value of the company’s assets originated by its partners with the assistance of AI and with respect to single-family rental operations grow. Thus, rising expenses will hurt PGY’s bottom-line growth to an extent.
Analysts do not seem optimistic regarding PGY’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for Pagaya’s 2026 and 2027 earnings has been unchanged at $3.23 and $3.72, respectively.
PGY’s Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
Overall, Pagaya combines an attractive valuation with improving profitability, a scalable AI-driven platform and a capital-light business model. These strengths make the stock appealing for long-term investors seeking exposure to the fintech lending space. However, rising production costs and the absence of upward earnings estimate revisions suggest that near-term upside may remain limited.
As such, existing shareholders can continue to hold the stock, while prospective investors may prefer to wait for a more attractive entry point or clearer evidence of sustained earnings momentum.
At present, Pagaya carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NEW YORK--(BUSINESS WIRE)--Pagaya Technologies Ltd. (NASDAQ: PGY) (“Pagaya”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced the closing of an upsized $900 million AAA-rated personal loan ABS transaction (PAID 2026-5). “Upsizing this transaction to $900 million – one of the largest in our company's history – underscores the acceleration of our personal loan platform and the endurance of our PAID shelf,” said Sahil Chandiramani, He.
NEW YORK--(BUSINESS WIRE)--Pagaya Technologies Ltd. (NASDAQ: PGY) (“Pagaya”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today noted that on July 15, 2026 Fitch Ratings (“Fitch”) revised the rating outlook for Pagaya and its wholly owned subsidiary, Pagaya US Holding Company LLC, to Positive from Stable. Fitch also affirmed the Long-Term Issuer Default Ratings (IDRs) at 'B' and affirmed the senior unsecured debt rating at 'B'. In its press re.
NEW YORK--(BUSINESS WIRE)--Pagaya Technologies Ltd. (NASDAQ: PGY) (“Pagaya”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced that the Company's management team will participate in the following investor conference: CG 46th Annual Growth Conference Date: August 11, 2026 Location: Boston, MA Webcast: Click here to register and listen to a live fireside at 4:30pm ET on August 11, 2026. About Pagaya Technologies Pagaya (NASDAQ: PGY) i.
In the latest close session, Pagaya Technologies Ltd. (PGY - Free Report) was up +2.28% at $17.48. The stock exceeded the S&P 500, which registered a gain of 0.89% for the day. Meanwhile, the Dow experienced a rise of 0.74%, and the technology-dominated Nasdaq saw an increase of 1.29%.
Heading into today, shares of the company had gained 13.25% over the past month, outpacing the Finance sector's gain of 1.82% and the S&P 500's loss of 0.63%.
Investors will be eagerly watching for the performance of Pagaya Technologies Ltd. in its upcoming earnings disclosure. The company's earnings report is set to be unveiled on July 30, 2026. The company's earnings per share (EPS) are projected to be $0.71, reflecting a 10.94% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $358.15 million, up 9.73% from the year-ago period.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $3.23 per share and revenue of $1.48 billion, indicating changes of -2.42% and +13.68%, respectively, compared to the previous year.
Investors should also note any recent changes to analyst estimates for Pagaya Technologies Ltd. Such recent modifications usually signify the changing landscape of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Pagaya Technologies Ltd. currently has a Zacks Rank of #3 (Hold).
With respect to valuation, Pagaya Technologies Ltd. is currently being traded at a Forward P/E ratio of 5.29. Its industry sports an average Forward P/E of 10.75, so one might conclude that Pagaya Technologies Ltd. is trading at a discount comparatively.
The Financial - Miscellaneous Services industry is part of the Finance sector. This industry, currently bearing a Zacks Industry Rank of 186, finds itself in the bottom 25% echelons of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.
NEW YORK--(BUSINESS WIRE)--Pagaya Technologies Ltd. (NASDAQ: PGY) (“Pagaya”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced the closing of RPM 2026-4, a $750 million upsized auto asset-backed securitization (ABS). This marks Pagaya's fourth fully pre-funded auto ABS transaction of 2026 and its largest to date, bringing the total amount of pre-funded auto ABS raised this year to $2.25 billion. Notably, this transaction features Pa.
In the latest close session, Pagaya Technologies Ltd. (PGY - Free Report) was down 1.7% at $17.96. This change lagged the S&P 500's 0.38% gain on the day. Meanwhile, the Dow gained 0.29%, and the Nasdaq, a tech-heavy index, added 0.62%.
The company's stock has climbed by 17.04% in the past month, exceeding the Finance sector's gain of 3.3% and the S&P 500's gain of 1.61%.
The investment community will be paying close attention to the earnings performance of Pagaya Technologies Ltd. in its upcoming release. The company is slated to reveal its earnings on July 30, 2026. The company is forecasted to report an EPS of $0.71, showcasing a 10.94% upward movement from the corresponding quarter of the prior year. Meanwhile, the latest consensus estimate predicts the revenue to be $358.15 million, indicating a 9.73% increase compared to the same quarter of the previous year.
For the annual period, the Zacks Consensus Estimates anticipate earnings of $3.23 per share and a revenue of $1.48 billion, signifying shifts of -2.42% and +13.68%, respectively, from the last year.
Any recent changes to analyst estimates for Pagaya Technologies Ltd. should also be noted by investors. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Pagaya Technologies Ltd. is currently a Zacks Rank #3 (Hold).
In the context of valuation, Pagaya Technologies Ltd. is at present trading with a Forward P/E ratio of 5.66. This indicates a discount in contrast to its industry's Forward P/E of 11.03.
The Financial - Miscellaneous Services industry is part of the Finance sector. Currently, this industry holds a Zacks Industry Rank of 162, positioning it in the bottom 35% of all 250+ industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
To follow PGY in the coming trading sessions, be sure to utilize Zacks.com.
NEW YORK--(BUSINESS WIRE)--Pagaya Technologies Ltd. (NASDAQ: PGY) (“Pagaya”) will announce its second quarter 2026 earnings on July 30, 2026. A conference call to discuss those earnings will be held on the same day at 8:30 a.m. ET / 3:30 p.m. IST. Details to register for the live webcast presentation are available here and on Pagaya's IR website located at investor.pagaya.com. The webcast replay will be available on the IR website following the conclusion of the event. About Pagaya Technologies.
Pagaya Technologies leverages proprietary AI for underwriting, driving strong cash flow and margin expansion with minimal incremental CapEx. PGY trades at a compelling forward P/E of 5.90, well below sector medians, as GAAP profitability and cash flow accelerate on growing client adoption. Free cash flow is used to pay down debt and build cash reserves, positioning PGY for future shareholder returns as leverage declines.
Pagaya Technologies (PGY) remains a volatile but compelling undervalued fintech with a 32% surge since my last coverage. I maintain a Strong Buy rating, citing robust revenue growth, multi-year sector tailwinds, and significant undervaluation versus peers. PGY trades at a forward P/E of 6x and a PEG of 0.05, reflecting a steep discount to sector medians.
Key Takeaways PGY uses AI-driven underwriting and forward flow agreements to scale lending with limited balance-sheet risk.PGY posted five straight quarters of GAAP profits after years of losses.LendingTree is expanding beyond mortgages, with adjusted EBITDA expected to be $152-$162 million in 2026. Artificial intelligence (AI) is transforming consumer lending by improving credit underwriting and loan origination. Among the fintech companies benefiting from this trend are Pagaya Technologies (PGY - Free Report) and LendingTree (TREE - Free Report) , though they employ markedly different business models.
Pagaya uses proprietary AI and machine learning to help financial institutions originate and fund loans more efficiently, while LendingTree operates a leading online marketplace that connects borrowers with lenders across multiple loan products.
These distinct strategies create different growth drivers and risk profiles. Pagaya’s performance hinges on the adoption of its AI-powered underwriting platform, whereas LendingTree’s results depend largely on borrower demand, lender marketing spend and interest rate trends.
While both companies are positioned to benefit as digital lending continues to recover, the question arises: which stock offers the better investment opportunity now? Comparing PGY and TREE across financial performance, valuation, growth prospects and profitability can help investors identify the stronger fintech play in today’s market.
The Case for PGYPagaya operates a capital-light, AI-powered lending platform that partners with financial institutions to improve credit underwriting and loan origination. While the company initially focused on personal loans, it has expanded into auto lending and point-of-sale financing, diversifying its asset mix and reducing reliance on any single lending category.
Its funding model is equally resilient, supported by relationships with more than 135 institutional investors and forward-flow agreements that provide predictable capital for future loan purchases.
The company’s key competitive advantage lies in its proprietary AI technology and product suite. Its pre-screen solution enables lenders to extend pre-approved loan offers to existing customers without requiring formal applications, helping partners increase customer engagement while lowering acquisition costs.
Combined with its asset-light model, wherein loans are quickly transferred through asset-backed securities transactions or forward-flow agreements, Pagaya maintains limited balance-sheet exposure, and minimizes credit and market risk.
Pagaya’s strategy translated into a sharp financial turnaround in 2025. The company delivered positive GAAP net income in all four quarters, reporting a record net income of $81.4 million during the year versus a net loss of $401.4 million in 2024. The momentum continued in the first quarter of 2026, with GAAP net income of $24.7 million. Improved loan performance, lower credit impairments and stronger AI-driven underwriting accuracy have strengthened the company’s profitability and operating outlook.
The Case for TREELendingTree is a leading digital lending marketplace that connects consumers with financial service providers across mortgages, personal loans, auto loans, small business loans, credit cards and insurance. In recent years, the company has shifted its strategy toward expanding higher-growth, non-mortgage businesses to diversify revenue streams and reduce reliance on the cyclical housing market.
This strategy is delivering results. In the first quarter of 2026, the Consumer segment’s revenues rose 18% year over year, led by a 49% jump in small business revenues. LendingTree has strengthened its ecosystem through initiatives such as SPRING (formerly MyLendingTree), TreeQual and the launch of its WinCard credit card in partnership with Upgrade, enhancing customer engagement and cross-selling opportunities.
Additionally, the acquisition of EarnUp has expanded the company’s technology capabilities in consumer payments and financial wellness.
Insurance has emerged as another key growth engine. Segment revenues saw a 13.4% CAGR between 2021 and 2025, with strong momentum continuing in the first quarter of 2026, supported by higher carrier demand and improved marketing efficiency.
Overall, the company’s improving operating performance was reflected in first-quarter GAAP net income of $17.3 million against a net loss of $12.4 million a year earlier. Backed by these trends, management projects 2026 adjusted EBITDA of $152-$162 million.
PGY & TREE: Price Performance, Valuation & Other ComparisonsIn the past year, shares of Pagaya have lost 20.6%, while the TREE stock has jumped 17.6%. Hence, in terms of investor sentiments, TREE has the edge.
1-Year Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, Pagaya is currently trading at a 12-month trailing price-to-book (P/B) of 2.46X, which is above TREE’s trailing 12-month P/B of 2.06X.
Thus, currently, the PGY stock is more expensive than LendingTree.
P/B TTM
Image Source: Zacks Investment Research
Pagaya’s return on equity (ROE) of 53.68% is above LendingTree’s 27.19%. This reflects that PGY is more efficiently using shareholder funds to generate profits compared with TREE.
ROE
Image Source: Zacks Investment Research
Pagaya & LendingTree’s Earnings & Sales ProspectsThe Zacks Consensus Estimate for PGY’s 2026 and 2027 revenues is pegged at $1.48 billion and $1.68 billion, respectively, implying year-over-year growth rates of 13.7% and 13.5%.
The consensus estimate for PGY’s earnings for 2026 indicates a year-over-year decline of 2.4%, while the 2027 estimate suggests year-over-year growth of 15.2%.
PGY’s Earnings Growth Expectation
Image Source: Zacks Investment Research
On the contrary, the Zacks Consensus Estimate for TREE’s 2026 and 2027 revenues is pegged at $1.32 billion and $1.41 billion, implying year-over-year growth rates of 18.5% and 6.4%, respectively.
Also, the consensus estimate for LendingTree’s earnings indicates a 71% year-over-year surge for 2026 and 21.4% growth for 2027.
TREE’s Earnings Growth Expectation
Image Source: Zacks Investment Research
PGY or TREE: Which Is a Better Investment Option Now?Both PGY and TREE have executed successful turnaround strategies and are benefiting from stronger consumer lending demand outside the traditional mortgage market.
However, despite LendingTree’s stronger near-term earnings growth outlook, Pagaya appears to be the better investment choice at the current levels as it combines an AI-first underwriting platform with a capital-light business model that enables it to scale loan originations while limiting balance-sheet risk. PGY’s return to GAAP profitability, a higher ROE than TREE and diversified funding base underscore the durability of its business model.
Although PGY trades at a modest valuation premium, that premium reflects its stronger profitability profile and differentiated AI capabilities.
Currently, PGY sports a Zacks Rank #1 (Strong Buy), while LendingTree has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Chief Executive Officer Gal Krubiner reported the purchase of 16,230 shares of Pagaya Technologies Ltd. (PGY +4.79%) in an open-market transaction on June 24, 2026, according to a SEC Form 4 filing.
Transaction summaryMetricValueShares traded (direct)16,230Transaction value$250,468Post-transaction shares (direct)555,906Transaction value based on SEC Form 4 weighted average purchase price ($15.43)
Key questionsHow does this purchase affect Krubiner's direct and overall economic exposure to Pagaya Technologies Ltd?
This open-market purchase raised Krubiner's direct holdings in class A ordinary stock to 555,906 shares.Was there any use of derivative instruments or indirect ownership vehicles in this transaction?
No indirect entities or derivative securities are referenced in the transaction; all activity was confined to direct ownership of Common Stock.How does the transaction price compare to recent market levels?
The purchase occurred at around $15.43 per share, which was approximately 1.5% above the June 24, 2026 market close of $15.20, and is also below the current price of $15.87 as of June 27, 2026.Does this activity represent a change from Krubiner's prior trading patterns?
Based on available historical data, Krubiner's transactions over the past two years have not resulted in a net change in direct shareholdings, indicating a pattern of short-term position resets rather than sustained accumulation or disposition.Company overviewMetricValuePrice (as of market close 6/24/26)$16.12Market capitalization$1.32 billionRevenue (TTM)$1.28 billionNet income (TTM)$93 millionCompany snapshotDevelops proprietary AI-driven software platforms that enable partners to originate loans and financial assets across multiple verticals, including personal lending and auto finance.Operates a B2B platform model, providing technology solutions to financial institutions and fintech partners, leveraging its infrastructure.Serves a diverse client base of fintech companies, traditional banks, auto finance providers, and brokers seeking advanced credit and asset origination solutions.Pagaya Technologies Ltd. is a technology-driven financial infrastructure provider specializing in AI-powered asset origination solutions. With a scalable platform and a presence across Israel, the United States, and the Cayman Islands, the company leverages advanced analytics to help partners expand lending capabilities and manage risk. Its focus on proprietary technology and deep integration with financial partners positions Pagaya as a differentiated player in the software infrastructure segment for financial services.
What this transaction means for investorsInsiders have millions of reasons to sell their stock, but they usually don’t buy unless they feel the price is about to go up. Krubiner’s purchase of over half a million shares on the open market signals confidence that his company’s stock price is about to rise.
Repackaging personal loans and auto loans into asset-backed securities (ABS) appears to be a strong business for Pagaya. On June 15, the company announced an upsized $800 million sale of personal loans bundled into an ABS with an AAA rating. It was the company’s fourth ABS transaction of the year.
Since 2018, Pagaya has completed $40 billion in ABS sales. It appears the pace of ABS sales is accelerating. The company already recorded over $5.5 billion in ABS sales in the first half of 2026.
Also in June, Pagaya expanded its partnership with Upgrade, Inc. to include a new asset class. Instead of personal loans, Pagaya will help facilitate origination of buy now pay later solutions at the point of sale.
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Pagaya Technologies. The Motley Fool has a disclosure policy.
Pagaya Technologies Ltd. (PGY - Free Report) closed at $15.87 in the latest trading session, marking a +2.52% move from the prior day. This move outpaced the S&P 500's daily loss of 0.05%. Elsewhere, the Dow saw a downswing of 0.09%, while the tech-heavy Nasdaq depreciated by 0.24%.
Shares of the company witnessed a gain of 10.89% over the previous month, beating the performance of the Finance sector with its gain of 2.3%, and the S&P 500's loss of 1.42%.
Analysts and investors alike will be keeping a close eye on the performance of Pagaya Technologies Ltd. in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $0.71, marking a 10.94% rise compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $358.15 million, up 9.73% from the year-ago period.
For the full year, the Zacks Consensus Estimates are projecting earnings of $3.23 per share and revenue of $1.48 billion, which would represent changes of -2.42% and +13.68%, respectively, from the prior year.
Investors might also notice recent changes to analyst estimates for Pagaya Technologies Ltd. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. At present, Pagaya Technologies Ltd. boasts a Zacks Rank of #1 (Strong Buy).
Looking at valuation, Pagaya Technologies Ltd. is presently trading at a Forward P/E ratio of 4.79. This indicates a discount in contrast to its industry's Forward P/E of 11.12.
The Financial - Miscellaneous Services industry is part of the Finance sector. Currently, this industry holds a Zacks Industry Rank of 103, positioning it in the top 43% of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.
NEW YORK--(BUSINESS WIRE)--Pagaya Technologies LTD. (NASDAQ: PGY) ("Pagaya" or the “Company”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced the closing of an upsized $800 million AAA-rated personal loan ABS transaction (PAID 2026-4). With 39 unique investors participating, the upsized deal brings Pagaya's year-to-date personal loan ABS issuance to nearly $4 billion and marks the company's third upsized personal loan ABS transact.
Pagaya Technologies LTD. (NASDAQ: PGY) ("Pagaya" or the “Company”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced the closing of an upsized $800 million AAA-rated personal loan ABS transaction (PAID 2026-4).
With 39 unique investors participating, the upsized deal brings Pagaya’s year-to-date personal loan ABS issuance to nearly $4 billion and marks the company’s third upsized personal loan ABS transaction this calendar year. The deal brings Pagaya’s total issuance since 2018 to $40 billion through 91 ABS transactions, backed by more than 165 institutional investors across its personal loan, auto and POS programs. Notably, collateral for this transaction includes personal loans from new network partners including Upstart and Achieve.
“The upsizing of our last two PAID transactions highlights the strength of our funding platform and the confidence institutional investors continue to place in Pagaya’s underwriting and asset performance,” said Sahil Chandiramani, Head of Capital Markets at Pagaya. “This transaction further expands our capacity to support both existing and new lending partners as they grow, while continuing to deliver attractive investment opportunities to the market.”
About Pagaya Technologies
Pagaya (NASDAQ: PGY) is a global technology company making life-changing financial products and services available to more people nationwide, as it reshapes the financial services ecosystem. By using machine learning, a vast data network and an AI-driven approach, Pagaya provides consumer credit and other products for its partners, their customers, and investors. Its proprietary API and capital solutions integrate into its network of partners to deliver seamless user experiences and greater access to the mainstream economy. For more information, visit pagaya.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260615808339/en/
In the latest close session, Pagaya Technologies Ltd. (PGY - Free Report) was down 2.1% at $15.42. The stock fell short of the S&P 500, which registered a gain of 0.5% for the day. Meanwhile, the Dow gained 0.7%, and the Nasdaq, a tech-heavy index, added 0.31%.
Shares of the company witnessed a gain of 15.81% over the previous month, beating the performance of the Finance sector with its gain of 1.89%, and the S&P 500's loss of 0.23%.
The upcoming earnings release of Pagaya Technologies Ltd. will be of great interest to investors. On that day, Pagaya Technologies Ltd. is projected to report earnings of $0.71 per share, which would represent year-over-year growth of 10.94%. Simultaneously, our latest consensus estimate expects the revenue to be $358.15 million, showing a 9.73% escalation compared to the year-ago quarter.
For the full year, the Zacks Consensus Estimates are projecting earnings of $3.23 per share and revenue of $1.48 billion, which would represent changes of -2.42% and +13.68%, respectively, from the prior year.
Investors should also take note of any recent adjustments to analyst estimates for Pagaya Technologies Ltd. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Currently, Pagaya Technologies Ltd. is carrying a Zacks Rank of #1 (Strong Buy).
In terms of valuation, Pagaya Technologies Ltd. is presently being traded at a Forward P/E ratio of 4.88. This indicates a discount in contrast to its industry's Forward P/E of 10.68.
The Financial - Miscellaneous Services industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 143, which puts it in the bottom 42% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.
It is hard to find an artificial intelligence (AI) stock these days that investors would rate as a value stock, but Pagaya Technologies (PGY +8.62%) is one. AI stocks and value arenʻt mutually exclusive. It's just that most AI stocks are overvalued, not undervalued, given the hype surrounding them.
But Pagaya has somehow avoided the hype, remaining just below the AI radar. It's stock trades at around $13 per share and has a trailing 12-month price-to-earnings (P/E) ratio of 11. But it has a forward P/E ratio of just 4, and its five-year price/earnings-to-growth (PEG) ratio barely registers at 0.03.
In other words, Pagaya stock is trading like a deep value stock, but it has massive growth potential.
Image source: Getty Images.
Pagaya uses AI to place loans Pagaya is a fintech that uses AI to help banks and financial institutions process loans. But the company specializes in handling non-prime loan requests that have been passed on by banks. Rejected loan requests deemed too risky by the average bank are forwarded to Pagaya, which uses its AI-enabled platform to determine if an alternate lender can be found in its network.
Pagaya is really the only company that specializes in this area, so it has carved out a growing niche. It makes most of its revenue through fees for placing these loans with lenders.
Today's Change
(
8.62
%) $
1.25
Current Price
$
15.75
In the first quarter, it generated $317 million in revenue, up 10% year over year. Of that amount, $299 million, or 94%, came from fees. The rest was mostly from interest income.
Its network volume rose by 9% in the quarter to $2.6 billion, fueled by growth in auto loans and point-of-sale loans, like those obtained through buy now, pay later (BNPL) companies. The point-of-sale loans are a rapidly growing part of its business and should continue to surge, as Pagaya just signed a deal with Sezzle to provide that service for its BNPL platform.
In addition, Pagaya reduced its expenses in Q1. This allowed it to raise its operating income by 67% to $80 million, while its net income spiked 212% to about $25 million.
Growth outlook Pagaya anticipates strong growth this year, and it recently raised its guidance for network volume and net income. The company now anticipates network volume of between $11.45 billion and $13 billion in 2026, which would be up from $10.5 billion last year. The previous guidance called for $11.25 billion at the low end.
Revenue is forecast by management at $1.4 billion to $1.575 billion this year, up almost 15% at the midpoint from 2025. Net income is anticipated to be within a range of $110 million to $160 million, up 67% at the midpoint from last year. The previous guidance called for net income of $100 million to $150 million.
It is this type of growth, combined with its dirt cheap valuation, that has Wall Street analysts extremely bullish on Pagaya stock. 100% of the 10 analysts covering Pagaya rate it a buy, with a median price target of $25 per share, suggesting 86% upside over the next year or so.
If you are looking for a cheap growth stock with big upside, this is one stock to consider.
As lending shifts toward machine learning, Upstart (UPST +5.02%) and Pagaya Technologies (PGY +8.62%) are racing to replace traditional credit scores. Both companies offer unique paths for investors seeking exposure to the next generation of credit.
These companies are frequently compared because they both use sophisticated algorithms to help lenders assess borrower risk more accurately than a standard FICO score. While they operate in the same general ecosystem, their business models and financial health vary significantly, making a side-by-side comparison essential for any long-term investor.
The case for UpstartUpstart operates an AI-based marketplace that connects consumers with more than 100 partners among financial services for various loan products. Its expansion includes home equity lines of credit and small-dollar relief loans, while its top three lending partners accounted for nearly 61% of total revenue in 2025. Customer concentration like this adds a layer of risk to the business, as the platform's success relies on maintaining relationships with a limited number of high-volume institutions.
In FY 2025, revenue reached approximately $1.1 billion, up roughly 58.9% from the prior year. This performance led to a net income of close to $53.6 million, indicating that the company is successfully scaling while improving its bottom line. The company's rapid growth highlights the increasing adoption of AI tools by smaller financial institutions looking to compete effectively with major national banks.
As of the December 2025 balance sheet, the debt-to-equity ratio was roughly 2.3x, calculated by dividing total debt by shareholders’ equity. The current ratio stood at approximately 3.0x, calculated by dividing current assets by current liabilities to assess the ability to pay short-term debts. For FY 2025, free cash flow was nearly negative $166.1 million, representing the cash from operations remaining after capital expenditures.
The case for Pagaya TechnologiesPagaya Technologies provides the AI infrastructure that allows its financial partners to evaluate and originate loans across various markets like auto and real estate. The company depends on a small number of fintech partners for a majority of its revenue. Customer concentration like this adds a layer of risk to the business, yet this technology-first strategy allows the firm to embed its software into existing workflows, making it a sticky partner for lenders.
During FY 2025, the company generated revenue of approximately $1.3 billion, which is a nearly 25.6% increase over the previous fiscal year. It achieved a net income of roughly $81.4 million and a net margin of close to 6.5%, which represents the percentage of revenue remaining after all expenses. This profitable result is a major milestone for the business as it transitions from an early investment phase into a more mature operating model.
Based on its December 2025 balance sheet, the debt-to-equity ratio is approximately 1.9x, calculated as total debt divided by shareholders’ equity. The current ratio is roughly 5.6x, indicating how many times current assets can cover short-term liabilities. In FY 2025, free cash flow was nearly $224.7 million, calculated as cash from operations minus capital expenditures, providing the company with significant financial flexibility.
Risk profile comparisonUpstart faces risks from macroeconomic factors, such as high interest rates, that reduce loan demand and limit the availability of investor funding. The business also depends on its AI models performing accurately across cycles, as errors could lead to sub-optimal pricing and a loss of partner trust. Furthermore, the company must compete for market share against established financial technology companies such as Fair Isaac.
Pagaya Technologies is sensitive to shifts in the real estate market and the availability of cost-effective capital within the complex securitization markets. Its expansion into property management introduces new regulatory risks and regional economic sensitivities that could impact its network volume. Additionally, the company competes with various fintech firms and traditional financial giants, including SoFi Technologies.
Valuation comparisonPagaya Technologies appears cheaper because its Forward P/E uses future earnings estimates and its P/S ratio compares market value to sales.
MetricUpstartPagaya TechnologiesSector BenchmarkForward P/E13.1x9.7x16.6xP/S ratio2.7x0.9xSector benchmark uses the SPDR XLF sector ETF. Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Pagaya and Upstart have one thing in common: Both use AI to help evaluate borrowers. But aside from this, there are key differences that can help investors choose one over the other.
Neither company is really a household name, but Upstart may be more recognizable. It also has a first-mover advantage and a reputation as a fintech disruptor. However, when funds are unavailable from banks and credit unions, it can act as more of a lender, carrying more loans on its own balance sheet. That means it faces a greater risk of borrower defaults.
Pagaya also uses AI-driven underwriting, but it limits direct exposure to the loans it facilitates by partnering with institutional investors rather than using its own capital to carry loans. This can make the business more resilient as economic conditions change.
Both companies are expanding into different types of loans, such as auto and mortgage loans, and are growing well. And Pagaya's model doesn't necessarily make it a safer investment. Both companies' stocks are prone to volatility because they remain tied to consumer credit trends and broader economic conditions. But for long-term investors looking for exposure to AI-powered lending, Pagaya may be the more balanced opportunity today.
Pagaya Technologies Ltd. overstates its AI-driven underwriting capabilities, raising concerns about management credibility and business model sustainability. PGY has improved its risk posture, but its profitability record remains short and should not yet be treated as through-the-cycle proof. The company's retained investment portfolio and large credit-loss allowance remain key risks, even after recent improvement.
Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:
Pagaya Technologies Ltd. (PGY - Free Report) : This product-focused technology company has seen the Zacks Consensus Estimate for its current year earnings increasing 12.2% over the last 60 days.
TTM Technologies, Inc. (TTMI - Free Report) : This company that manufactures and sells printed circuit boards has seen the Zacks Consensus Estimate for its current year earnings increasing 27.5% over the last 60 days.
Green Dot Corporation (GDOT - Free Report) : This financial technology and bank holding company has seen the Zacks Consensus Estimate for its current year earnings increasing 12.8% over the last 60 days.
Occidental Petroleum Corporation (OXY - Free Report) : This explorer and developer of oil and gas has seen the Zacks Consensus Estimate for its current year earnings increasing 67.2% over the last 60 days.
Civista Bancshares, Inc. (CIVB - Free Report) : This financial holding company for Civista Bank has seen the Zacks Consensus Estimate for its current year earnings increasing 9.2% over the last 60 days.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
