We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Pagaya's AI Lending Flywheel Gains Speed: What's Next for PGY?
Read MoreHide Full Article
Key Takeaways
Pagaya's 2Q26 network volume hit a record $3.5B, up 33% y/y, while revenues and other income rose 19%.
PGY's Auto volumes surged about 140%, driving more than 75% of total network volume growth.
Pagaya raised its 2026 net income outlook to $155-$180M and sees network volume at $12.5-$13.25B.
Pagaya Technologies (PGY - Free Report) is gaining momentum as its artificial intelligence (AI)-driven credit platform handles more lending activity across a growing partner network. In the second quarter of 2026, network volume reached a record $3.5 billion, up 33% year over year, while revenues and other income rose 19% to $387 million. The rally reflects stronger application flow, wider product adoption and deeper use of Pagaya’s technology across lending channels.
Auto lending remains a major driver. Pagaya’s Auto network volume reached a $4.8-billion annualized run rate, contributing more than 75% to the year-over-year increase in total network volume. Auto volume surged roughly 140%, while the company’s Affiliate Optimizer Engine generated more than $1 billion in network volume in the quarter. These offerings are helping Pagaya broaden the sources feeding its platform.
The company is also expanding into new credit categories. In June, Pagaya extended its partnership with Upgrade to support the lender’s Flex Pay buy-now-pay-later offering. This expands Pagaya’s role beyond personal loans and highlights its ability to deepen existing partnerships while entering adjacent lending markets.
Funding capacity is scaling alongside loan activity. Pagaya raised $3.7 billion through six asset-backed securities (ABS) transactions in the second quarter and expanded its institutional-investor network to 174 participants. It also completed large auto and personal-loan securitizations in July. However, higher capital costs remain a watch point, with fee revenue less production costs as a percentage of network volume falling year over year.
Importantly, stronger volumes are translating into higher profits. Adjusted EBITDA rose 43% to $124 million, while GAAP net income increased to $45 million. Pagaya also raised its 2026 net income outlook to $155-$180 million and expects network volume of $12.5-$13.25 billion. Continued growth in Auto, new products and partner penetration could keep the AI lending flywheel moving, though funding costs and credit discipline remain key variables to watch.
Comparing PGY’s Business Model With Peers
Like 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.
Investors have been bullish on the Pagaya stock, which has appreciated 95.5% in the past six months, outperforming the industry’s growth.
Image Source: Zacks Investment Research
The PGY stock is currently trading at a 12-month forward price-to-sales of 1.10X, which is below the industry average of 2.59X 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 been unchanged at $3.72 and $4.13, respectively. The consensus estimate indicates 12.4% and 11% year-over-year growth for 2026 and 2027, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Pagaya's AI Lending Flywheel Gains Speed: What's Next for PGY?
Key Takeaways
Pagaya Technologies (PGY - Free Report) is gaining momentum as its artificial intelligence (AI)-driven credit platform handles more lending activity across a growing partner network. In the second quarter of 2026, network volume reached a record $3.5 billion, up 33% year over year, while revenues and other income rose 19% to $387 million. The rally reflects stronger application flow, wider product adoption and deeper use of Pagaya’s technology across lending channels.
Auto lending remains a major driver. Pagaya’s Auto network volume reached a $4.8-billion annualized run rate, contributing more than 75% to the year-over-year increase in total network volume. Auto volume surged roughly 140%, while the company’s Affiliate Optimizer Engine generated more than $1 billion in network volume in the quarter. These offerings are helping Pagaya broaden the sources feeding its platform.
The company is also expanding into new credit categories. In June, Pagaya extended its partnership with Upgrade to support the lender’s Flex Pay buy-now-pay-later offering. This expands Pagaya’s role beyond personal loans and highlights its ability to deepen existing partnerships while entering adjacent lending markets.
Funding capacity is scaling alongside loan activity. Pagaya raised $3.7 billion through six asset-backed securities (ABS) transactions in the second quarter and expanded its institutional-investor network to 174 participants. It also completed large auto and personal-loan securitizations in July. However, higher capital costs remain a watch point, with fee revenue less production costs as a percentage of network volume falling year over year.
Importantly, stronger volumes are translating into higher profits. Adjusted EBITDA rose 43% to $124 million, while GAAP net income increased to $45 million. Pagaya also raised its 2026 net income outlook to $155-$180 million and expects network volume of $12.5-$13.25 billion. Continued growth in Auto, new products and partner penetration could keep the AI lending flywheel moving, though funding costs and credit discipline remain key variables to watch.
Comparing PGY’s Business Model With Peers
Like 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 Analysis
Investors have been bullish on the Pagaya stock, which has appreciated 95.5% in the past six months, outperforming the industry’s growth.
Image Source: Zacks Investment Research
The PGY stock is currently trading at a 12-month forward price-to-sales of 1.10X, which is below the industry average of 2.59X 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 been unchanged at $3.72 and $4.13, respectively. The consensus estimate indicates 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.