CRCL Stock In Spotlight After Mizuho Cuts Circle’s Price Target, Warns AI Agents Could Hurt USDC Demand

Mizuho anticipates $4 billion to $9 billion of possible loss to USDC’s market value and a 10% to 20% hit to Circle’s reserve revenue.

• Mizuho cut its price target on Circle to $43 from $45 and reiterated an ‘Underperform’ rating, citing “marked risk” to its revenue from AI assistants.
• The firm’s modeling revealed that AI agents such as Muse are expected to push customers away from USDC toward FDIC-insured alternatives with greater yields.
• The current price cut comes amid a new stablecoin-deposit argument where a BIS report found banks can influence adoption through deposit pricing.

Circle Internet Group (CRCL) shares edged lower in morning trading after Mizuho cut its price target, warning that AI personal assistants could pose a “marked risk” to the stablecoin issuer’s revenue by steering users away from its USDC (USDC) token.

According to TheFly, Mizuho kept an ‘Underperform’ rating on the stock and cut the price target to $43 from $45. From Friday’s close of $85, the new target implies about 49.4% downside. 

Mizuho said it modeled how AI agents would answer a question about where to hold cash. It found that agents like Muse are likely to recommend moving away from USDC. TheFly said agents favored higher-yielding Federal Deposit Insurance Corporation (FDIC)-insured alternatives.

FDIC-insured accounts are bank deposits covered by the U.S. government’s deposit insurance, up to set limits. Even if users wanted to choose crypto, Mizuho said AI agents preferred platforms other than Circle. 

CRCL stock dipped over 7% in morning trade, amid broader weakness in the crypto equities market. On Stocktwits, retail sentiment around CRCL remained in the ‘bullish’ zone, accompanied by ‘normal’ chatter levels over the past day. The stock hit its highest adjusted close in early September at $103. 

At around $80, the stock is trading about 22% below its September high.

Mizuho Sees Downside To USDC Market Value

Mizuho sees a potential downside of $4 billion to $9 billion in USDC market value over the medium term. It also expects a 10% to 20% hit to Circle’s reserve revenue, the income it makes on the cash and Treasuries that back USDC.

Earnings Expectations

Circle is slated to announce third-quarter results Nov. 4 before markets open. Analysts predict $787.70 million in sales, up from $701.32 million last quarter, according to Koyfin data. Adjusted earnings are estimated at $0.42 per share, up from $0.26 per share in the prior quarter, an increase of around 64%.

This comes amid an ongoing dispute over how stablecoins compete with bank deposits. A Bank for International Settlements working paper found that “banks retain some influence over the pace of that adoption through deposit pricing.”

CRCL stock has been up over 8% so far this year and lost over 33% in the last 12 months.

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