Dave Inc. DAVE and Upstart Holdings, Inc. UPST share the same core idea, which is that artificial intelligence can make consumer credit decisions faster, broader and more accurate than traditional methods. Both companies use proprietary models to judge risk, connect borrowers with financing and improve the customer experience through digital tools. They also depend on reliable funding partners and careful credit management to turn loan growth into durable profits.However, Dave focuses on everyday banking customers who need short-term liquidity, then aims to deepen those relationships through checking, debit and installment products. Upstart runs a larger lending marketplace spanning personal loans, auto loans, home equity products and revolving credit. Dave currently offers stronger margins and a tighter operating model, while Upstart brings more scale and product diversity. For investors, the better choice depends on execution, operating leverage, capital efficiency and the price investors are being asked to pay.The Case for DAVEDave’s appeal starts with a focused customer journey. ExtraCash addresses an immediate need between paychecks, giving the company a way to attract members. Dave can then offer those users a checking account, debit card and eventually Dave Flex. Upstart serves more lending categories, but Dave’s narrower approach makes cross-selling easier to understand and measure.CashAI is central to this model. Dave uses real-time transaction data rather than relying on traditional credit scores. The system has supported larger ExtraCash volumes while keeping losses controlled. In the first quarter, originations rose 37%, yet the 28-day past-due rate improved to 1.69%. That evidence matters because growth in short-term credit is only useful when repayment performance remains sound.Dave also converts growth into profit more effectively than Upstart. Its adjusted EBITDA margin reached 44% compared with 13% for Upstart. Member growth and higher revenue per user supported that result, but the broader point is operating leverage: Dave’s digital platform can serve more activity without expenses rising at the same pace.The Coastal Community Bank funding arrangement could improve the model further. Moving ExtraCash receivables toward an off-balance-sheet structure should release liquidity and reduce Dave’s direct funding burden. It also gives management more room to invest in customer acquisition, new products or share repurchases.Dave still faces regulatory, partner and product-launch risks. Flex must prove that it can add spending without weakening credit quality. Even so, Dave combines a clear strategy, strong margins, improving underwriting results and a credible path toward a more capital-efficient business.The Case for UPSTUpstart’s strength is breadth. Its AI platform supports unsecured personal loans, auto loans, home equity lines and the Cash Line. This gives lending partners access to several credit categories through one technology provider. Compared with Dave, this broader reach creates greater upside, but it also requires Upstart to manage more products, partners, funding channels and credit cycles.The company also has scale. Upstart facilitated about $3.4 billion of originations in the first quarter, with personal loans providing the core volume. More than 90% of loans were fully automated, showing how its software can speed up borrower decisions.Funding conditions have improved. Multi-year forward-flow commitments, securitizations, and relationships with banks and credit unions give Upstart several capital sources. Conditional approval to establish a national bank could eventually simplify operations and expand product reach, although further regulatory approvals are still required.The concern is that stronger volume has not yet produced the same earnings quality seen at Dave. Upstart’s first-quarter adjusted EBITDA margin fell to 13%, contribution margin declined to 50%, and the company reported a GAAP net loss. Management expects margins to improve as spending moderates and newer products mature, but that outcome depends on execution and a stable credit environment.Upstart remains an interesting AI lending platform with strong technology, broad product exposure and improved funding visibility. However, its business is more complex and more sensitive to lender demand, capital markets and consumer credit conditions.How Do Estimates Compare for DAVE & UPST?The Zacks Consensus Estimate for Dave’s 2026 and 2027 sales implies year-over-year growth of 28.85% and 19.93%, respectively. The consensus mark for 2026 and 2027 EPS suggests a year-over-year increase of 27.47% and 28.63%, respectively. Over the past 30 days, estimates for DAVE’s 2026 and 2027 EPS have been revised upward. For Dave:Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Upstart’s 2026 and 2027 sales calls for year-over-year growth of 36.53% and 30.61%, respectively. The consensus estimates for both 2026 and 2027 EPS have been revised marginally downward over the past 30 days. However, the figures suggest a year-over-year increase of 29.31% and 44.89%, respectively. For Upstart:Image Source: Zacks Investment ResearchPrice Performance and Valuation of DAVE & UPSTSo far in the year, Dave shares have surged 70%, while Upstart shares have declined 38.4%. In comparison, the S&P 500 composite has advanced 8.2% in the same time frame. Image Source: Zacks Investment ResearchFollowing the share rally, DAVE is trading at a forward 12-month price-to-sales of 6.03X, which is above its one-year median of 4.54X. Meanwhile, UPST is presently trading at a forward 12-month price-to-sales of 1.54X, which is below its one-year median of 3.08X. This indicates that investors already pay a large premium for Dave’s stronger margins, cleaner execution, and more focused model. Upstart’s lower ratio offers more room for upside if profitability improves, but it also reflects greater sensitivity to funding markets and credit conditions.Image Source: Zacks Investment ResearchConclusionBoth companies have credible AI-driven lending models, but Dave presents the cleaner investment case today. Its focused customer strategy, improving credit results, high adjusted EBITDA margin and Coastal funding transition provide a stronger mix of growth and operating control. Upstart has broader products, rising originations, committed funding and a bank charter, yet profitability remains less consistent, and the model depends more heavily on external credit conditions. Dave’s richer sales multiple raises the bar, so the stock is not low risk. Even so, it is the better name to add, while existing Upstart investors should stay patient rather than increase exposure.DAVE has a Zacks Rank #2 (Buy), while UPST carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment Research
