Circle Sinks as Mizuho Warns AI Agents Threaten USDC
Circle beat EPS estimates four straight quarters despite 72% earnings compression. Mizuho targets $43 (50% downside), citing a 10-20% revenue threat from AI agents, while named insiders sold $20.18 mi
Circle Sinks as Mizuho Warns AI Agents Threaten USDC
NEW YORK, October 26 —
Even as Circle Internet Group (CRCL) beat analyst EPS estimates four quarters running, actual quarterly earnings compressed by more than two-thirds in the same stretch. Monday's 7% selloff arrived as Mizuho quantified the structural threat to the revenue model: AI agents steering users away from USDC toward higher-yielding alternatives.
- Mizuho's $43 Underperform target sits roughly 50% below Friday's close; AI agents could erode 10%, 20% of Circle's 95.2% reserve revenue.
- Actual quarterly EPS fell from $0.64 to $0.18 across four periods of nominal beats; shares trade at 54x forward earnings.
- Named insiders sold $20.18 million in open-market shares over 90 days; zero purchases recorded.
Beats That Obscure a Falling Floor
Circle Internet Group, the issuer of USDC and EURC stablecoins that also runs Circle Mint for stablecoin issuance and redemption and the Circle Payments Network, has logged four consecutive EPS beats. The underlying trajectory is sequential compression: earnings of $0.64, $0.43, $0.21, $0.18 in four reported periods, a staircase down rather than a platform. The most recent beat was 12.5% on a $0.16 consensus estimate, raising the question of what a beat signals when the bar descends in lockstep with results. Four consecutive beats describe how well Circle manages analyst expectations, not whether it is growing stronger. The DCF math on a compressing income stream at 54x forward earnings is unflattering.
One Revenue Stream, One Attack Vector
Mizuho's AI-agent thesis, detailed in its Monday note, targets that concentration directly. Circle earns 95.2% of its quarterly revenue from interest on USDC reserves, a model that depends on users holding idle cash in USDC rather than seeking higher yield elsewhere. The bank tested AI personal assistants, including one called Muse, and found they directed users toward FDIC-insured accounts and away from Circle's platforms, per the published analysis. Mizuho estimates AI agents could erode 10% to 20% of Circle's reserve revenue; at a trailing twelve-month gross margin of 22%, even the low end would be hard to absorb quietly.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| CRCL | $20.3B | 54.0x | -40.0% |
| CRWV | $30.4B | n/a | -60.1% |
| BMNR | $12.6B | 22.3x | -58.3% |
| FIG | $12.5B | 68.2x | -53.6% |
| NBIS | $38.9B | n/a | +26.6% |
| OKLO | $4.8B | n/a | -80.8% |
The C-Suite Has Already Voted
Named C-suite officers sold $20.18 million in open-market shares over the 90 days through October 26, with zero purchases across all named insiders. CFO Jeremy Fox-geen sold 15,000 shares at $90.00 on October 21, a price above Circle's current level after Monday's selloff. Circle reports third-quarter results on November 4; those figures will capture USDC balances and reserve yields through September, before any October deterioration appears in the financials. At 54x forward earnings with EPS compressing sequentially, the November 4 test is simple: if USDC balances and reserve yields hold, the consensus $107.35 target has ground to stand on. If they do not, Mizuho's $43 will look less extreme. Run the free Circle Internet Group deep-dive →
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Frequently Asked Questions
Why did Mizuho downgrade Circle to $43?
Mizuho cut Circle to $43 Underperform (50% below Friday's close) citing a structural threat to the company's revenue model. AI personal assistants, including one called Muse, direct users toward FDIC-insured accounts instead of Circle's platforms, eroding an estimated 10-20% of reserve revenue, which represents 95.2% of Circle's quarterly earnings.
What is the gap between Circle's EPS beats and its actual earnings?
Circle beat consensus EPS expectations for four consecutive quarters, yet reported earnings fell from $0.64 to $0.18 over that same period. The beats reflect expectations management, not fundamental strength; the underlying business compressed 72% in four quarters.
Did insiders buy or sell Circle stock recently?
Named C-suite officers sold $20.18 million in stock over 90 days through October 26, with zero purchases recorded. CFO Jeremy Fox-Green sold 15,000 shares at $90 on October 21, a price above Circle's level after Monday's selloff.
What do investors know about AI agents and USDC?
Mizuho tested AI personal assistants and found they directed users away from USDC toward higher-yielding alternatives. The bank estimates this could erode 10-20% of Circle's reserve revenue, which carries a 22% trailing twelve-month gross margin, making even the low-end erosion difficult to absorb.
When will the AI threat become visible in Circle's financials?
Circle reports third-quarter results on November 4, which will reveal USDC balances and reserve yields through September, before any October deterioration appears. That test is straightforward: if USDC balances and yields hold, the $107.35 consensus target has ground to stand on; if not, Mizuho's $43 looks less extreme.
Circle Internet Group shares fell 7% on Monday after Mizuho reiterated an Underperform rating and trimmed its price target to $43, warning that AI personal assistants are steering users away from USDC toward higher-yielding, FDIC-insured alternatives — a threat aimed squarely at a company that earned 95.2% of its Q2 revenue from interest on USDC's reserves.