Pagaya: This AI Antithesis Might Be Undervalued (Rating Upgrade)

Pagaya Technologies Ltd. overstates its AI-driven underwriting capabilities, raising concerns about management credibility and business model sustainability. PGY has improved its risk posture, but its profitability record remains short and should not yet be treated as through-the-cycle proof. The company's retained investment portfolio and large credit-loss allowance remain key risks, even after recent improvement.