Banks and lenders have spent years promising that artificial intelligence will cut costs and speed up decisions. This autumn, the people who supervise them started asking a harder question: what happens when the software starts acting on its own?
Reuters reported in an exclusive that the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC are asking banks how they limit, monitor and approve AI actions, whether agent decisions can be audited, and how an autonomous system gets shut down. None of the agencies has prescribed specific steps yet.
Regulators Ask Banks Where the Off Switch Is
The concern reaches well beyond Washington. The European Central Bank gave lenders an end-October deadline to produce plans against AI-enabled cyberattacks, and the Bank of England is pressing banks on their recovery plans.
Michael Woodbridge, a cybersecurity partner at Grant Thornton in London, said, “The adoption of AI is often outpacing the ability to put the controls in place.” Sukand Ramachandran, a managing director and senior partner at BCG, warned that a serious attack could lock customers out of their accounts and disrupt payments across the wider economy. More on the lenders under that scrutiny is in our ranking of the best bank stocks according to billionaires.
Privately held AI developers sit at the center of the debate. European banks and regulators have grown frustrated by limited access to Anthropic’s Mythos tool this year, amid concerns that US banks may get first access. Rogue AI agents developed by OpenAI were also reportedly involved in a breach of Hugging Face, another private company.
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Investors are also testing how much they believe in AI spending. Democrats won the House and Senate in last Tuesday’s midterm elections, and Bloomberg reported that many of the winners ran on anti-AI platforms.
Barry Knapp, managing partner at Ironsides Macroeconomics, said he is not a buyer of anything right now. In his view, investors had acted as if data centers were a new state of affairs that could be projected years into the future.
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Stock market charts. Photo by Kaboompics.com on Pexels
Our Methodology
To compile this list, we searched for AI-powered financial stocks and AI fintech stocks, and reviewed rankings published by financial websites over the past 12 months. From the stocks that came up, we picked the 10 with the highest average upside potential, based on analysts’ average price target, as of November 9, 2026. We also list each stock’s number of hedge fund holders as of Q2 2026, from our database of 1,006 hedge funds.
At Insider Monkey, we are obsessed with what hedge funds do. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 612% since May 2014, beating its benchmark by 375 percentage points (see more details here).
5 Best AI-Powered Financial Stocks to Buy According to Analysts
5. Lemonade (NYSE:LMND)
Market Cap: $3.10 billion
Average Upside Potential: 40%
Number of Hedge Fund Holders: 29
AI is the reason Lemonade can grow with fewer people. It says it now has more than 2.5 times the premium base it had four years ago, and it plans native support for personal AI agents and live demos of its Lemonade OS at an upcoming investor day. Car insurance premium grew 63%, and the company now sells Car in 14 states, with an autonomous version for Tesla’s Full Self-Driving available in six of them.
The numbers show the model working. Third-quarter revenue jumped 73% to $336 million, and gross profit hit a record $118 million. In-force premium reached $1.55 billion, up 34%, the 12th straight quarter of faster growth. The insurer expects positive adjusted EBITDA in the fourth quarter and for all of 2027.
Analysts are less sure about the spending. On November 9, Keefe, Bruyette & Woods kept a Market Perform rating and lowered its price target to $45 from $48, saying higher growth spending and operating costs outweigh improving revenue growth and loss trends. The firm also noted that premium growth above 30% stands out among property and casualty insurers.
4. Affirm (NASDAQ:AFRM)
Market Cap: $23.15 billion
Average Upside Potential: 42%
Number of Hedge Fund Holders: 57
A transformer-based model, the same kind of technology behind modern chatbots, now sits inside Affirm’s underwriting. Chief Executive Max Levchin said on the latest call that “the first version of the transformer-based model delivered an incremental 3.4% of end-to-end conversion,” meaning more shoppers completed purchases, and that credit losses stayed flat.
The buy now, pay later lender keeps growing quickly. In its fiscal first quarter, gross merchandise volume rose 34% to $14.4 billion, the twelfth straight quarter above 30% growth, and revenue climbed 35% to $1.26 billion. Management guided to fiscal second-quarter revenue of $1.44 billion to $1.47 billion.
Earnings per share of $0.47 fell short of expectations, and loans more than 30 days past due rose 35 basis points to 2.9%. On November 9, Bernstein reiterated an Outperform rating with a $110 price target, saying the quarter beat expectations and that a stock down about 20% over three months offered a chance to buy. On October 26, Morgan Stanley kept an Equal Weight rating and lowered its target to $79 from $82. Whether the lender’s profitability turn has earned it a place in a major index is the focus of our analysis of Affirm’s index case.
3. Circle (NYSE:CRCL)
Market Cap: $17.79 billion
Average Upside Potential: 54%
Number of Hedge Fund Holders: 44
AI agents that need to pay for things can now hold wallets built by Circle. In May the company launched Circle Agent Stack, which includes Agent Wallets for agents to hold and send funds, an Agent Marketplace where agents find and pay for services, and Nanopayments for gas-free USDC transfers as small as a millionth of a dollar. Chief Executive Jeremy Allaire called it “the first full suite of services we’re launching where AI agents themselves are the customers.”
The core business is the stablecoin itself. USDC in circulation ended the third quarter at $73.9 billion, flat from a year earlier, while revenue and reserve income came to $865 million and net income from continuing operations to $226 million.
Keefe, Bruyette & Woods kept a Market Perform rating and cut its target to $90 from $105. Needham analyst John Todaro cut his price target to $103 from $134 on November 5 and kept a Buy rating, pointing to slower growth in USDC supply while still expecting the Arc network to begin diversifying Circle’s revenue from 2028. Leadership changes at the company are covered in our report on Circle losing its CFO and a co-founder on the same day.
2. Robinhood (NASDAQ:HOOD)
Market Cap: $76.15 billion
Average Upside Potential: 54%
Number of Hedge Fund Holders: 87
Robinhood is putting AI agents inside the brokerage itself. About 200 thousand customers have opened Agentic Trading Accounts, which let AI agents trade on their behalf and have generated more than $1.6 billion in notional volume. The accounts are part of a new set of agent tools that also includes Robinhood Agents and Agent Apps.
Prediction markets went from side project to real revenue in a single year. The brokerage booked $173 million from event contracts in the third quarter, up more than six times from a year earlier, as customers traded a record 16.4 billion contracts.
The core business gives that bet a base. Gold subscribers reached a record 5.2 million, up 34%, and total platform assets rose 19% to $396 billion.On October 28, Bernstein analyst Gautam Chhugani kept an Outperform rating and a $160 price target, expecting prediction markets and new products to drive the next leg of growth, while Wells Fargo kept an Equal Weight rating and cut its target to $100 from $120, pointing to lower take rates. How far it has spread beyond trading is the subject of our piece on its 13 businesses that each bring in $100 million.
1. Pagaya (NASDAQ:PGY)
Market Cap: $1.55 billion
Average Upside Potential: 61%
Number of Hedge Fund Holders: 38
Banks and lenders that want AI-driven lending without building it themselves can plug into Pagaya. The company describes itself as a technology firm delivering AI-driven products for the financial ecosystem, using machine learning and a network of data to offer consumer credit through its lending partners. In the third quarter it signed up Citizens Financial Group and First National Bank of Omaha for personal loans and point-of-sale financing, which brings its total to seven new partners over the past 12 months.
Those partners are feeding the network. Network volume rose 29% to $3.6 billion, and GAAP net income reached $50 million, up $27 million from a year earlier. Revenue and other income grew 12% to $390 million. Management raised its full-year net income guidance, and its outlook now calls for $162 million to $182 million of GAAP net income.
While we acknowledge the risk and potential of CCJ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
