The financial industry is changing as technology makes borrowing faster, improves credit decisions and allows customers to manage money without visiting a branch. SoFi Technologies (SOFI Quick QuoteSOFI - Free Report) and Upstart Holdings (UPST Quick QuoteUPST - Free Report) are part of that shift. Both rely on digital distribution, data and lending technology to reach consumers, and both stand to benefit when credit demand strengthens. They also face familiar challenges such as changing interest rates, consumer repayment pressures and competition for borrowers.

However, the similarities end at how they make money. SoFi has developed into a nationally chartered digital bank offering deposits, loans, investing, credit cards and technology services. Upstart primarily connects borrowers with lending partners through artificial intelligence-driven underwriting, earning fees when loans are arranged. These models create different funding needs, customer relationships and exposure to economic swings. 

With both companies making progress but taking different routes, investors should examine which business offers more dependable growth and greater control over its financial future.

The Case for SOFI

SoFi's main advantage is that a customer relationship can extend beyond a loan. Members can save, borrow, invest and spend within the same platform, helping the company generate additional business without acquiring new customers. Its 17.1 million members held 26.7 million products in September, and existing members opened more than half of new products during the third quarter. Upstart's narrower lending focus offers fewer opportunities to build that engagement.

A national bank charter gives SoFi an edge. Deposits reached $51.3 billion, providing a stable funding base that Upstart currently lacks. SoFi can also originate loans for outside partners, allowing it to earn fees without retaining every loan. This balance between deposit-funded lending and capital-light activity supports flexibility when borrowing conditions change.

The company is broadening revenue beyond traditional loans. Fee-based revenues represented 42% of third-quarter revenues, supported by financial services and the loan platform business. Although its technology segment faced pressure from a major customer transition, further cross-selling and improved product monetization offer ways to offset that weakness.

New digital-asset initiatives provide additional opportunities. SoFi Earn introduces interest-bearing tokenized deposits, while the Mastercard stablecoin settlement rollout and Payward partnership extend its payments infrastructure. 

SoFi raised its 2026 outlook and expects $6.4 billion in adjusted revenue in 2027. While credit losses and expansion costs warrant attention, its diversified model offers a stronger foundation for sustained growth.

The Case for UPST

Upstart has a credible opportunity to improve consumer lending through artificial intelligence. Its models assess borrower risk using more information than traditional credit scores, expanding credit access while helping partners price loans. Management reports its model is 2.77 times as accurate as a conventional benchmark. Still, unlike SoFi, Upstart depends heavily on lending activity rather than relationships spanning banking, investing and payments.

Operational improvements of UPST deserve recognition. Third-quarter originations reached $4.1 billion, while contribution profit climbed to $218 million. Automation is reducing manual processing costs, and the secured lending business achieved a positive 17% contribution margin. However, newer auto and home products need to demonstrate sustainable economics as volumes expand.

Upstart has also reduced its direct funding burden. More than 95% of outstanding platform loans are funded by third parties, including committed capital partners. Partnerships with MIT Federal Credit Union and Credit Union of Denver support distribution. Still, outside funding leaves volumes sensitive to lenders' risk appetite, while retained investments remain exposed to credit deterioration. 

The proposed Upstart Bank could lower origination costs and improve funding efficiency after its planned 2027 opening. Yet regulatory approval and implementation are still pending. SoFi already operates with a bank charter and a substantial deposit base, making that contrast significant.

Meanwhile, the Upstart Macro Index rose to 1.53 in early November, indicating elevated default pressure. October daily originations fell 9% sequentially, and management reduced its 2026 revenue and adjusted EBITDA forecasts. Better underwriting cannot fully remove these cyclical pressures, leaving the shares vulnerable to further volatility.

How Do Estimates Compare for SOFI & UPST?

The Zacks Consensus Estimate for SoFi’s 2026 and 2027 sales implies year-over-year growth of 41.42% and 26.27%, respectively. Over the past month, estimates for SOFI’s 2026 and 2027 EPS have been revised upward. The consensus mark for 2026 and 2027 EPS suggests a year-over-year increase of 56.41% and 44.08%, respectively. 

For SoFi Technologies:

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Upstart’s 2026 and 2027 sales calls for year-over-year growth of 29.32% and 29.61%, respectively. However, the consensus EPS estimates for both 2026 and 2027 have been revised downward over the past 30 days, though the figures suggest a year-over-year increase of 4.60% and 47.62%, respectively.  

For Upstart:

Image Source: Zacks Investment Research

Price Performance and Valuation of SOFI & UPST

Over the past three months, SoFi shares have declined 14.5%, while Upstart shares have plunged 37.1%. In comparison, the S&P 500 composite has slipped 3% in the same time frame. 

Image Source: Zacks Investment Research

SOFI is trading at a forward 12-month price-to-sales of 3.27X, which is below its one-year median of 4.42X. Meanwhile, UPST is presently trading at a forward 12-month price-to-sales of 1.12X, which is also below its one-year median of 1.82X. 

Upstart therefore looks cheaper, but the discount reflects meaningful business risks. Its earnings remain closely tied to funding costs, credit performance and loan investor demand. SoFi's premium rests on diversified revenue, deposit funding and a clearer path toward higher profitability. This premium requires consistent execution, especially in lending and newer products. 

Image Source: Zacks Investment Research

Conclusion

Both companies are improving operations, but they offer different levels of predictability. SoFi combines expanding customer relationships, an established deposit base and a growing mix of lending and fee-generating services. Its recent initiatives in payments and digital assets add longer-term possibilities, although execution risks remain. Upstart's underwriting technology and partner network are valuable, yet worsening borrower conditions and a reduced near-term outlook make its recovery less certain. 

For investors choosing between the two, SoFi offers the more convincing route to sustainable growth. Reducing exposure to Upstart looks prudent until borrower trends and earnings visibility improve materially.

While SOFI carries a Zacks Rank #2 (Buy), UPST has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.