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5 Small Cap Stocks With Wide Moats

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In this article, we will be taking a look at the 10 small cap stocks with wide moats. To skip our detailed analysis of stocks with wide moats, you can go directly to see the 10 Small Cap Stocks With Wide Moats.

5. Upstart Holdings, Inc. (NASDAQ:UPST)

Number of Hedge Fund Holders: 20

Market Capitalization as of December 27: $1.02 billion

Upstart Holdings, Inc. (NASDAQ:UPST) is a consumer finance company based in San Mateo, California. The company operates a cloud-based artificial intelligence lending platform in the US.

A Hold rating was reiterated on Upstart Holdings, Inc. (NASDAQ:UPST) shares on November 9 by analyst John Hecht at Jefferies.

Upstart Holdings, Inc. (NASDAQ:UPST) is a company in the finance sector with a strong moat since it offers an alternative for people looking to access credit. The company is different from others in the finance sector since it offers personal loans to consumers with no or limited credit history, opening up a largely ignored market for it to profit from. The company guided for revenues of $800 million by the end of 2022. Marco Atzeni at Investing Milestone expects Upstart Holdings, Inc. (NASDAQ:UPST) to see revenue growth of 25% from 2024 to 2027.

There were 20 hedge funds long Upstart Holdings, Inc. (NASDAQ:UPST) in the third quarter, with a total stake value of $81.4 million.

Vulcan Value Partners, an investment management firm, mentioned Upstart Holdings, Inc. (NASDAQ:UPST) in its second-quarter 2022 investor letter. Here’s what the firm said:

Upstart Holdings Inc. was a material detractor for the quarter. It was a mistake, and we sold our position. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models that are designed to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. When we purchased Upstart, we believed the company had an excellent product and the addressable market was large.

Upstart’s results during 2021 were impressive. In the first quarter of 2022, the company reported solid results but lowered guidance and, more importantly, used its balance sheet to warehouse loans temporarily. The company’s decision to use its balance sheet to finance its growth surprised us and other market participants, and its stock price decreased dramatically. While we admire the management team, we are less confident in the company’s long-term prospects.

It will be more difficult than we anticipated for Upstart to extend its competitive advantages with smaller banks into adjacent markets such as auto loans and mortgages. As a result, our value for Upstart is unstable and the company no longer qualifies for investment. We are following our discipline and reallocating capital into companies with more stable values.”

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The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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