Circle surges 35%, Morgan Stanley urgently raises the target price!

While the market still uses traditional FinTech valuation frameworks to evaluate Circle, this “top stablecoin company” has released a financial report that is enough to turn Wall Street’s head and dramatically reshape perceptions. On February 26th, local time, Circle Internet Group (NYSE: CRCL) stock soared above $90, reaching a new high for the year, closing with a gain of over 35%.

This astonishing stock surge was not without warning; it was driven not only by better-than-expected performance but also by a grand blueprint of an AI agent economy gradually unfolding.

1. Earnings Breakthrough: From “Interest Income” to “Real Profit”

● All the upward momentum traces back to the hefty Q4 2025 financial report.

● Data shows that Circle reported $770 million in revenue during the period, a 77% year-over-year increase, surpassing market expectations of $747 million, and pushing net profit to $133.4 million, compared to just $4.4 million the previous year. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) skyrocketed by 412% to $167 million, with a profit margin of 54%.

● These figures shocked the market because they prove that Circle is moving away from relying solely on “reserve interest income.” Previously, most profits for stablecoin issuers came from interest earned on USDC-backed government bond reserves, a model vulnerable to economic cycles.

● But in Q4, even with a reserve asset return rate of only 3.8%, Circle still achieved remarkable profit growth. CFO Jeremy Fox-Green stated in a conference call that this reflects the company’s inherent operational leverage— as USDC circulation increases, marginal costs sharply decline.

2. Investment Bank Play: Morgan Stanley Raises Target Price Amid Market Frenzy

● Supported by strong performance, Wall Street investment banks quickly adjusted their valuation models. Morgan Stanley raised Circle’s target price from $66 to $80, maintaining a “hold” rating but significantly increasing revenue forecasts for 2026-2028, and raising the 2028 EPS estimate from $2.63 to $3.28.

● Analyst David noted that the upward revision reflects rapid growth in “other business income,” including upcoming scaled CPN and StableFX solutions.

● However, the market is evidently more aggressive than Morgan Stanley. Optimistic Bernstein analyst maintained a “buy” rating and set a target price as high as $190, believing Circle’s growth trend now shows “distinct differences from the crypto market,” with infrastructure expansion bringing higher-margin revenue.

● This divergence highlights a shift in market focus: investors are no longer just concerned about how much USDC is issued, but about how much value these dollars create in circulation.

3. Singularity Moment: AI Agents to Become the “Largest Business Increment”

If the improvement in financial data was the fuse for the stock surge, then Circle CEO Jeremy Allaire’s grand narrative about AI during the earnings call is the powder keg igniting market imagination.

● “We are entering a world where, in my view, hundreds of billions or even trillions of AI agents will interact and perform economic functions on the internet.” Allaire’s opening statement was interpreted by the market as Circle’s core future strategy. He cited futurist Ray Kurzweil, suggesting that Q1 2026 could be the “singularity” takeoff point.

● In Allaire’s vision, AI agents will no longer be just chat tools but autonomous entities capable of economic actions. They will need to hire each other, purchase computing power, and pay for data—this “machine-to-machine” (M2M) economic activity requires a fast, low-cost, programmable exchange medium. Traditional banking systems are incapable of supporting such high-frequency, microsecond transactions, but USDC was born for this purpose.

● To seize this opportunity, Circle has launched a testnet called Circle Gateway, designed specifically for autonomous agents. It allows agents to autonomously and programmably automate cross-chain transactions at a cost of just one-hundredth of a cent, with settlement times under one second. This means future internet traffic will be accompanied by capital flows, and Circle aims to become the “clearinghouse” of this new world.

4. Ecosystem Expansion: Arc Mainnet and Payment Network Synergy

● Supporting the AI agent economy dream is the infrastructure Circle is building. The Layer-1 blockchain network Arc’s testnet has launched, attracting over 100 traditional financial institutions, with the mainnet expected to go live in 2026.

● Allaire describes Arc as a “liquidity and distribution hub for other asset issuers,” where tokenized stocks, funds, or bank deposits can be issued and circulated.

● Meanwhile, Circle Payments Network (CPN), a registered financial institution, increased from 29 to 55 members in Q3, with an annualized transaction volume of $5.7 billion, up 68% quarter-over-quarter. This indicates that beyond the grand AI narrative, Circle is also steadily expanding in traditional cross-border settlement and payments.

● Collaboration with prediction market platform Polymarket has made USDC the “default asset” for on-chain trading and settlement.

5. Regulatory Benefits and Market Risks

● Circle’s rise is also aided by macroeconomic improvements. The US President Trump signing the stablecoin regulation bill and the progress of the GENIUS Act provide clear compliance pathways for regulated stablecoin issuers. As one of the earliest companies to obtain New York’s BitLicense, Circle’s compliance advantage is becoming a competitive barrier.

● Of course, risks remain. Morgan Stanley’s report cautiously notes that despite promising prospects, Circle’s current gross margin is only 8.67%, and its stock price has already exceeded the $80 target after the surge, possibly indicating overvaluation. Additionally, while the AI agent narrative is exciting, this market is still in its infancy, and real commercial applications will take time to develop.

Circle’s recent surge is not just a victory of financial figures but a signal of a revaluation of value. When Jeremy Allaire deeply links the company’s fate to the upcoming AI agent economy, the market no longer sees a simple stablecoin issuer but a “platform” trying to define the future rules of digital economy.

Every jump above $90 reflects an early vote for that “hundreds of billions of AI agents” world. In this high-stakes gamble on the future, Circle has revealed its hand—making USDC the currency of machines.