SoFi vs. Upstart: Scaling in a $40B Lending Market

The digital lending platform market is poised for substantial expansion, with a projected total addressable market of $39.8 Billion by 2033, growing at a compound annual rate of 11.85%. This creates a vast opportunity for platforms that can scale efficiently. Within this landscape, SoFi and Upstart have adopted distinct models that reflect different paths to capturing market share.

SoFi's approach is built on an integrated ecosystem, leveraging its technology platform to drive growth through partnerships and deeper client engagement. The company's Technology Platform segment, which includes its core banking services and Galileo, saw net revenue grow 12% year-over-year to $114.6 million in Q3 2025. Notably, this growth occurred even as the total number of enabled accounts dipped slightly. The key to this scalability is not just adding new users, but extracting more value from existing relationships and expanding reach via alliances. CEO Anthony Noto highlighted that growth is powered by enhanced engagement with existing clients as well as new partnerships, citing major deals with brands like Southwest Airlines and Wyndham Hotels to launch rewards debit cards. This model allows SoFi to generate more predictable, recurring revenue streams by embedding its technology into the operations of large, established companies, effectively scaling its reach without a proportional increase in customer acquisition costs.

Upstart, by contrast, operates as an AI-driven marketplace, and its growth is directly tied to transaction volume. The company's Q3 2025 results underscore this model's explosive potential, with revenue surging 71% year-over-year to approximately $277 million. This acceleration is fueled by a massive increase in loan transactions, which jumped 128% from the prior year to about 428,000. Upstart's AI platform acts as a credit engine, connecting borrowers with lenders, and its growth is a direct function of the number of deals it facilitates. The company is also expanding into new product categories like auto and home loans, where transaction volumes are growing in the range of 300% year-over-year. This creates a high-growth, high-volume business, but one that is more directly exposed to the pace of originations and the economic cycle.

The fundamental difference lies in the growth engine. SoFi's model scales by embedding its technology into partners' customer bases, aiming for stable, diversified revenue. Upstart's model scales by increasing the number of transactions processed through its AI platform, leading to rapid top-line expansion but a business structure more dependent on transaction flow. Both are targeting the same growing market, but they are building their moats in different ways.

Growth Trajectory and Financial Leverage

The path from explosive growth to sustainable profitability is where the two models diverge most starkly. SoFi is demonstrating how its integrated ecosystem can drive scalable earnings, while Upstart's stock remains under pressure from macroeconomic fears despite strong top-line expansion.

SoFi's 2025 outlook has been decisively upgraded across the board, signaling a maturing platform. The company now expects to add roughly 3.5 million new members, a 34% growth rate that exceeds its earlier target. This member growth is directly fueling higher revenue and, more importantly, improved profitability. Adjusted EBITDA guidance has been raised to $1.035 billion, with adjusted net income and EPS also moved meaningfully higher. This isn't just growth; it's profitable growth. The stock's 70% climb in 2025 reflects investor confidence in this transition, as the company moves from a risky disruptor to a fully profitable financial powerhouse.

The valuation tells the story. SoFi trades at a forward P/E of around 46, a premium that acknowledges its path to higher margins and recurring revenue. This multiple is supported by the operating leverage built into its ecosystem model, where adding members and deepening engagement across banking, lending, and investing products drives efficiency.

Upstart's trajectory is more volatile and sensitive to external risks. The company reported strong growth and improved profitability in 2025, with revenue surging 71% year-over-year. Yet its stock finished the year down 29%. The disconnect is clear: fears about rising credit risk, particularly in its auto loan segment, have overwhelmed the positive business momentum. The stock's extreme volatility and 88% decline from its peak highlight how its valuation is now a direct function of perceived credit cycle risk, not just transaction volume.

The bottom line is one of structural leverage. SoFi's model, by embedding its technology into partners and building a diversified revenue base, is creating a more predictable path to profitable scaling. Upstart's AI-driven marketplace is a high-growth engine, but its financial performance and stock price remain tightly coupled to the health of the credit market. For a growth investor, SoFi's revised outlook and stock performance suggest a more scalable earnings story, while Upstart's valuation remains a bet on a favorable macroeconomic backdrop.

Catalysts, Risks, and Scalability Outlook

The race to dominate the $40 billion digital lending market hinges on two distinct catalysts and a looming risk. For SoFi, the path to compounding growth is clear: its integrated ecosystem is designed to deepen engagement and product penetration. The company's "one-stop shop" approach aims to hook users early and grow with them throughout their financial lives, from student loans to banking, investing, and now even blockchain-based services. This vertical growth strategy is already paying off, with the company adding 905,000 new members in the third quarter, a 35% surge. As these members stay longer and adopt more products, SoFi's revenue becomes more predictable and recurring, creating a powerful flywheel that scales efficiently.

Upstart's catalyst is its AI-driven transaction volume, but its primary risk is rising credit risk, particularly in its auto loan market. The company's explosive growth is a direct function of the number of deals it facilitates, and its new AI model has been a key driver. However, as fears about rising credit risk hammered the stock in 2025, the business's resilience is now in question. The labor market is weakening, and rising auto delinquencies have spooked the credit market, creating a headwind that could pressure the company's credit models and profitability.

The upcoming test for Upstart is its Q4 earnings call on February 10, 2026. This will be a critical stress test for its AI credit models and macro resilience. Investors will scrutinize whether the company's internal risk metrics hold up against a deteriorating economic backdrop. For SoFi, the catalyst is internal: its ecosystem is scaling engagement, while its risk profile is more diversified across lending, banking, and investing. Upstart's upcoming results will determine if its growth engine can survive a credit cycle downturn, or if its valuation will remain hostage to macro fears.