STNE vs. UPST: Which Fintech Stock Should You Pick Now?

Fintech stocks have always captured investor imagination with their blend of technology innovation and financial disruption. Two names in the space, StoneCo STNE and Upstart UPST, are carving distinct paths within this booming sector. While both are thriving in their respective markets, they represent distinctly different fintech models and risk profiles.

Upstart is an artificial intelligence-driven lender focused on transforming credit underwriting, while StoneCo operates as a payments and financial services platform targeting small and medium-sized businesses in Brazil. Both have shown impressive execution recently — Upstart with surging revenues and profitability after a long slump, and StoneCo with disciplined growth, robust returns and shareholder-friendly actions. 

Yet, the question for investors remains: Which fintech stock offers the better opportunity today, AI-fueled lending or a focused, cash-rich payments leader? Let’s weigh the pros and cons of each to find out which deserves a spot in your portfolio now.

The Case for StoneCo

StoneCo has emerged as one of Latin America’s most resilient fintech stories. In the second quarter of 2025, the company delivered a 27% year-over-year jump in adjusted net income and a 22% return on equity, with the financial services segment achieving a stellar 30% ROE. What makes this performance stand out is Brazil’s challenging macro backdrop, with high interest rates and signs of economic deceleration. Yet, StoneCo continues to post healthy growth across all its business lines.

The company’s MSMB payments segment expanded its client base to 4.5 million, up 17% from last year, while PIX QR Code transaction volume soared 59%. Its integrated banking platform is also gaining momentum, with deposits climbing 36% year over year, and a remarkable 83% of those deposits now time-based, offering StoneCo a stable funding base. Meanwhile, its credit portfolio grew 25% sequentially, driven by merchant working capital loans, while nonperforming loans remained stable, reflecting disciplined underwriting.

StoneCo’s sale of Linx software unit and other non-core assets is a strategic pivot, freeing capital to reinvest in core fintech operations or return to shareholders through buybacks. Particularly, it allows StoneCo to target more than 90% of its total addressable market, payments, banking and credit, estimated at BRL 100 billion in revenue opportunity. Crucially, its share in this vast market remains small, underscoring significant growth potential. With respect to buybacks, we note that StoneCo has already repurchased nearly BRL 2.6 billion in shares over the past year, a signal of management’s confidence.

While macroeconomic headwinds could still weigh on short-term TPV growth, StoneCo’s diversified revenue streams, growing client engagement and margin expansion suggest it can sustain profitability even in a tough economy. Compared with Upstart, StoneCo’s revenues are less volatile, its business less cyclical, and its growth path steadier.

The Case for Upstart

Upstart’s resurgence in 2025 has been nothing short of dramatic. In the second quarter of 2025, the company posted $257 million in revenues, up 102% year over year, and swung back to GAAP profitability with $5.6 million in net income, a quarter sooner than expected. Loan originations surged to $2.8 billion, powered by its next-generation AI model, Model 22, which improved loan separation accuracy by 17 percentage points versus the benchmark textbook credit model.

The company’s technology continues to impress. Conversion rates jumped from 19% to 23.9%, and 92% of loans are now fully automated. Upstart’s diversification into Auto and Home lending also gained traction, together accounting for more than 10% of originations. Partnerships with credit unions like Cornerstone and ABNB Federal have bolstered funding stability, and contribution profit rose 85% year over year to $141 million, with margins holding strong at 58%.

Yet, Upstart’s growth comes with volatility. Its exposure to credit-sensitive borrowers and reliance on capital market sentiment make it vulnerable to downturns. The stock’s performance in recent times was affected by softer credit conditions and fallout from distress in the used car lending market. Although not directly related to the company, the bankruptcy of Tricolor Holdings, which catered to borrowers with limited credit history, amplified worries about credit quality. However, operating in a merchant-driven ecosystem, StoneCo largely avoids such issues.

Moreover, while Upstart’s technology moat is undeniable, it remains capital-intensive as it incubates new products before transitioning them to third-party funding. Until those funding channels stabilize, earnings could remain sensitive to balance sheet usage and macro trends.

How Do Zacks Estimates Compare for STNE & UPST?

The Zacks Consensus Estimate for StoneCo’s 2025 sales and EPS implies a year-over-year increase of 15.73% and 22.86%, respectively. EPS estimates have been trending northward over the past month.

For STNE:

Meanwhile, the consensus estimate for Upstart’s 2025 sales implies a year-over-year rise of 73.32%. The full-year 2025 and 2026 Zacks Consensus Estimates for EPS have been revised upward over the past three months, and the figures suggest significant increases year over year.

For UPST:

Valuation: STNE vs. UPST

From a valuation perspective, we note that StoneCo shares are trading cheap, as suggested by the Value Score of B. However, Upstart shares are currently overvalued, as implied by the Value Score of F. 

In terms of forward 12-month Price/Sales (P/S), STNE stock is trading at 1.92X, which is well below Upstart’s 4.13X. However, both STNE and UPST are trading below their five-year medians.

Price Performance: STNE vs. UPST

Over the past three months, shares of STNE have outperformed UPST and the S&P 500 composite.

Conclusion: Why StoneCo Stands Out

Both StoneCo and Upstart embody fintech innovation, but their risk profiles diverge sharply. Upstart offers explosive growth and technological edge, yet it remains tied to the unpredictability of credit cycles and capital markets. In contrast, StoneCo has evolved into a leaner, highly profitable financial platform with stable funding, recurring revenues and robust cash generation. Its focus on small business payments, banking, and credit in Brazil provides a large, underpenetrated growth runway with lower cyclicality.

For investors seeking durability over drama, StoneCo stands out as the more balanced, resilient and strategically focused fintech to own now. Estimate revisions and valuation also suggest that STNE stands out as the better fintech pick currently.

While STNE sports a Zacks Rank #1 (Strong Buy), UPST has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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