Billionaire David E. Shaw’s 10 Small-Cap Stock Picks with Huge Upside Potential

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

D. E. Shaw’s Equity Stake: $202.43 Million

Market Capitalization as of May 9: $4.42 billion

Stock Upside Potential as of May 9: 40.28%

Number of Hedge Fund Holders: 39

Upstart Holdings, Inc. (NASDAQ:UPST) is a financial services company that operates a cloud-based artificial intelligence (AI) lending platform. Its platform includes personal loans, automotive retail and refinance loans, home equity lines of credit, and small-dollar loans. The company’s growth prospects have received a significant boost owing to the new artificial intelligence Model 18 that accelerates conversion in its platform.

Consequently, Upstart Holdings, Inc. (NASDAQ:UPST) delivered impressive Q1 2025 results with revenues increasing 67% to $213.4 million, beating analysts’ estimates of $201.3 million. Underlying growth was robust as loan originations rose 102% to 240,706 loans. On the other hand, adjusted earnings improved from a loss of $20.3 million to a profit of $42.6 million.

Upstart Holdings, Inc. (NASDAQ:UPST) stands out as one of billionaire David E. Shaw’s 10 small-cap stock picks with huge upside potential on diversifying its business away from unsecured consumer loans to auto loans that grew five times in the first quarter to $61 million. Additionally, it has inked a strategic partnership with fintech company One Pay, paving the way for it to target Walmart’s customer base. Consequently, Citi analysts have reiterated a Buy rating on the stock, even after cutting the price target to $83 from $108.