Observed Signal · Sep 24, 2026 · Technical Release · Source: Linas Newsletter · Impact: 3/5 · Sentiment: Positive
Affirm's AI Transformer Improves Underwriting for No-FICO Applicants
Affirm has deployed a new AI underwriting model, a transformer, at U.S. checkout. According to its engineering blog, the model achieves its largest gains—a 3.4% increase in completed purchases—among applicants with no FICO score. The improvement is driven primarily by Affirm's own repayment data, not new data sources. The headline result came from a narrower test than the press release suggests, focusing on applicants without a FICO score. The model integrates with Affirm's existing XGBoost stack. This development highlights the growing role of alternative data and AI in credit underwriting, potentially reshaping how lenders assess creditworthiness beyond traditional credit scoring.
Affirm's AI underwriting model represents a notable application of AI in fintech that could influence how lenders assess credit, but its impact on the AdTech industry is indirect.
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Key Takeaways & Evidence Grounding
- Affirm launched a new AI underwriting model using a transformer architecture.
- The model is live at U.S. checkout.
- The largest gains are seen among applicants with no FICO score.
- Affirm reports a 3.4% increase in completed purchases from a narrower test.
- Most gains came from Affirm's own repayment data.
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1 Entity mapped“Affirm's new AI underwriting model, a transformer now live at U.S. checkout, gets its largest gains on applicants with no FICO score....”
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Affirm Stock Has Room to Run, BofA Says
Bank of America reiterated its buy rating on Affirm and raised its 12-month price target to $88 from $82 after the BNPL company reported stronger-than-expected fiscal third-quarter results. Affirm posted $1.04 billion in revenue and $281 million in operating income (adjusted), both above analyst expectations, and guided fiscal-year revenue to $4.175–4.205 billion versus consensus of $4.14 billion. The bank's analyst Matthew O’Neill credited disciplined underwriting, healthy consumer demand and improving monetization, calling a recent 5% post-earnings pullback an "air pocket" ahead of an investor forum. Affirm has rallied roughly 32% over the past month and 38% over the past year; LSEG data shows 24 of 32 analysts rate the stock buy or strong buy.
Loop Capital Initiates Buy on Affirm with 45% Upside
Loop Capital initiated coverage of Affirm Holdings with a buy rating and a $105 price target, implying a 45% upside from the previous close. Analyst Reginald Smith highlighted Affirm's strong growth potential, noting its current transaction frequency of under 7 times per consumer annually versus Visa's 70, indicating significant headroom. The firm emphasized Affirm's distribution expansion through partners like Stripe and Adyen, and the Affirm Card's potential in a $2.4 trillion opportunity. Smith also compared Affirm favorably to Klarna, citing higher transaction profit and adjusted operating profit despite being one-third the size by GMV. The stock has risen 42% over six months, with 28 of 36 analysts rating it buy or strong buy.
Wolfe Upgrades Affirm to Outperform, Cites Structural Growth
Wolfe Research upgraded Affirm Holdings to outperform from peer perform, citing a compelling valuation after the stock slid about 8% since its fiscal Q4 earnings. Analyst Darrin Peller set a price target of $90, implying 26% upside. He highlighted Affirm's strong execution, market share gains, Affirm Card momentum, strong 0% APR trends, and opportunities in international expansion and vertical diversification. Peller also noted growth drivers like Affirm Edge and agentic commerce. The call aligns with Wall Street consensus, as 29 of 37 analysts rate the stock buy or strong buy.
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