SoFi Technologies vs. Upstart: Which Fintech Stock Is the Better Long-Term Buy?

Although we're still only in the first half of April, it has been a volatile 2026 for investors. The market continues to digest consumer weakness, geopolitical conflict, inflationary pressures, and general economic uncertainty. That's a lot to consider.

Amid this backdrop, fintech stocks have gotten absolutely crushed. SoFi Technologies (NASDAQ: SOFI) shares are down 38% in 2026 (as of April 9). Investors in Upstart (NASDAQ: UPST), another innovator, are dealing with a 37% drop this year.

It's time to start thinking about the next five years and beyond. Which of these stocks is the better long-term play?

Image source: The Motley Fool.

Despite strong performance, SoFi is dealing with a notable short report

Muddy Waters, a research and investment firm, announced in March that it had a short position in SoFi shares. The firm said that SoFi engages in financial engineering that inflates its profits, understates loan losses and debt, and incentivizes the management team to dilute existing shareholders.

SoFi, which will take legal action against Muddy Waters, disagrees with the claims. CEO Anthony Noto purchased $500,000 worth of shares after the report was released. And the fact that SoFi is a bank means that it's already one of the most regulated and closely watched companies. I don't believe investors have any reason to panic right now.

However, this can take attention away from SoFi's stellar fundamental performance. The company's growth, indicated by a 38% adjusted revenue gain in 2025 and a forecast 30% increase in 2026, has been notable. SoFi's customer base, now at 13.7 million members, has expanded 161% in the past three years.

When you target a younger and higher-income cohort of consumers with consistent innovation and an exceptional user experience, it makes sense that SoFi has been so successful. Recently, the business has been pushing toward cryptocurrency and blockchain projects, for instance.

SoFi is becoming sounder from a financial perspective as well. Its first full year of generally accepted accounting principles (GAAP) profitability was in 2024. Adjusted net income jumped 112% last year. And it's projected to soar 72% in 2026.

Upstart's exciting platform leverages AI capabilities

Upstart's operations center on its artificial intelligence (AI) lending platform, which analyzes more than 2,500 unique variables to assess credit risk, completely foregoes the traditional FICO scoring model. Upstart's more than 100 lending partners benefit from this technology because they can provide credit to a larger share of the population. Upstart collects fees in the process.

Despite its disruptive strategy, the biggest knock on this business is just how cyclical it is. When interest rates were declining and low, like what happened in 2020 and 2021, it performed extremely well, and revenue surged.

But when interest rates rose, like in 2022 and 2023, Upstart reported declining loan volumes and revenue, with sizable net losses. Maybe in a more stable environment, something the last five years have not been, Upstart can produce more consistent financial results. For what it's worth, the leadership team expects revenue to grow 40% in 2026, which is encouraging.

Upstart recently announced plans to apply for a national bank charter, which would allow it to accept deposits that the company can use to fund its own loans. This would provide a low-cost source of capital. However, it would inch Upstart one step closer to operating like a traditional lender, which would add to the concern about cyclicality.

Nonetheless, the market has high hopes. Sell-side analysts believe Upstart's adjusted earnings per share will increase at a compound annual rate of 31% between 2025 and 2028.

The winner has the makings of a sustainable business model

By integrating AI into the lending process, Upstart really is an exciting story. However, the fact that its operations are so cyclical is a major red flag. It still has a lot to prove. Therefore, it's not the better long-term play.

The winner of this debate is SoFi, even though it will be under the microscope going forward due to the allegations outlined in the short report. The digital bank's growth remains impressive. Its profits are soaring. And now that shares trade 50% below their record, investors can buy at a more reasonable forward price-to-earnings ratio of 27.8.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.