Mizuho thinks AI assistants that shop around for yield on behalf of their users could become a real drag on Circle’s business.
Mizuho Securities on Monday trimmed its Circle Internet Group (CRCL) price target by $2, to $43, while reiterating an Underperform rating. In the note, the bank estimated that AI personal-assistant tools pulling holders out of USDC and into better-paying products could cut Circle’s reserve revenue by 10% to 20% over the medium term and erase $4 billion to $9 billion of USDC’s market value.
“We believe AI personal assistant engines pose a marked risk to Circle’s medium-term revenue,” Mizuho analysts wrote.
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Inside Mizuho’s Chatbot Test
Mizuho put the question to AI agents, Muse among them: where should someone keep their cash? The assistants tended to steer away from USDC and toward FDIC-insured accounts with higher yields. Told the user preferred to stay in crypto, the agents still “seem to prefer other platforms” to Circle’s, the note said. Mizuho’s exercise shows advice, not withdrawals.
In a faster-adoption scenario, Mizuho sees roughly $7 billion shifting to fiat products and about $2 billion to stablecoins that pay more, which would lower reserve revenue by 18%. Assuming wider AI adoption, Mizuho now models USDC supply averaging $101 billion in 2027, down from the $108 billion it projected before, and expects 2027 reserve revenue of $4.1 billion, $200 million below its earlier $4.3 billion call. Mizuho’s breakdown of where USDC lived at the end of the second quarter: roughly 30% on Coinbase, 53% on other venues, and about 17% on Circle’s own platform, which pays holders nothing.
Why Reserve Income Matters
Interest on the cash and Treasuries backing USDC makes up nearly all of Circle’s sales. The company reported $668 million of reserve income for the second quarter, about 95% of its $701 million in total revenue and reserve income, with $73.3 billion of USDC outstanding at quarter end. Earlier this month, Circle said about 59 cents of each first-half revenue dollar went to USDC partners and transaction costs. Rival dollar tokens have rattled the stock before.
Bernstein took the other side on the same day, raising its Circle target to $145 from $140 and keeping an Outperform rating.
Circle shares fell 7.1% on Monday to $79.84 as crypto stocks broadly slid, with Coinbase down nearly 3%, then gained 2.2% on Tuesday to close at $81.57. Mizuho’s $43 target sits about 47% below Tuesday’s close. Circle is scheduled to report third-quarter results on Nov. 4 before the market opens.
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