Mizuho cut its price target for Circle to $43 from $45 and kept an Underperform rating. The brokerage cited a 10-20% medium-term downside risk to reserve revenue as AI agents steer USDC holders elsewhere.
Mizuho cut its price target for USDC issuer Circle Internet Group to $43 from $45, warning that AI personal assistant engines pose a serious threat to the firm's medium-term revenue. The analysts maintained an Underperform rating in a Monday research report.
Circle's shares closed down 7% at $79.84 on Monday, and the new target implies 46% downside from current levels. According to Mizuho, the analysts said: "We believe AI personal assistant engines pose a marked risk to Circle's medium-term revenue."
AI agents may steer holders to higher yields
Mizuho estimated that wider adoption of AI agents could shrink USDC's market capitalization by $4 billion to $9 billion and reduce Circle's reserve revenue. The brokerage cited a 10-20% medium-term downside risk to that revenue.
Its simulation suggested that AI agents, including Muse, are likely to recommend higher-yielding FDIC-insured fiat alternatives, such as savings accounts offered by SoFi. Even when users insist on staying in crypto, the agents seem to prefer other platforms over holding USDC directly on Circle's ecosystem, according to the report.
As of the second quarter, about 17% of USDC was held on Circle's platform, where holders earned no yield. Another 30% sat on Coinbase and the remaining 53% on other platforms, the report said.
Faster adoption would cut deeper
Under a faster AI adoption scenario, Mizuho projected that about $7 billion could move into fiat products and another $2 billion into higher-yielding stablecoins. That would shrink USDC's market cap by up to $9 billion and cut Circle's reserve revenue by 18%.
The analysts also lowered their forecast for average USDC in circulation in 2027 to $101 billion from $108 billion under wider AI adoption. Projected reserve revenue falls 5% to $4.1 billion from $4.3 billion, and the adjusted EBITDA forecast drops by about 5% to $603 million from $635 million.
Circle reported roughly $1.4 billion in revenue in the first half of 2026 and said it retained roughly 7 cents in net profit for every dollar of revenue.
Source: The Block
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