Mizuho Cuts Circle Target to $43, Flags AI Agents as Revenue Threat

Mizuho cut its price target on Circle Internet Group to $43 from $45 on Monday and kept an Underperform rating, citing a 10–20% medium-term downside risk to the stablecoin issuer's reserve revenue from AI agents. Circle's shares closed down 7% at $79.84, leaving the bank's target implying roughly 46% downside from current levels.

The call rests on a simple observation about behavior. AI personal assistants, once they start managing money for ordinary users, will chase yield wherever it lives. And USDC sitting on Circle's own platform earns holders nothing.

"We believe AI personal assistant engines pose a marked risk to Circle's medium-term revenue," the Mizuho analysts wrote in a Monday research report.

What does the AI scenario actually do to USDC?

Mizuho ran simulations on how AI agents, including one called Muse, would treat idle stablecoin balances. The agents, the report found, are likely to recommend steering away from USDC in favor of FDIC-insured fiat alternatives offering higher yields — savings accounts at SoFi, for example. Even when users insist on staying in crypto, the agents "seem to prefer other platforms" over holding USDC directly inside Circle's ecosystem.

The distribution of USDC holdings explains why that matters. As of the second quarter of this year:

• About 17% of USDC sat on Circle's own platform, earning no yield
• 30% was held on Coinbase
• The remaining 53% sat on other platforms

Under a faster AI adoption scenario, Mizuho projected roughly $7 billion would migrate into fiat products and another $2 billion into higher-yielding stablecoins. That outflow would shrink USDC's market capitalization by as much as $9 billion — the bank put the full range at $4 billion to $9 billion — and cut Circle's reserve revenue by 18%.

How far do the forecasts fall?

The analysts trimmed their numbers across the board. Their forecast for average USDC in circulation in 2027 drops to $101 billion from $108 billion under wider AI adoption. Projected reserve revenue falls about 5%, to $4.1 billion from $4.3 billion. Adjusted EBITDA gets the same haircut, down to $603 million from $635 million.

Circle's own numbers give the scale of what's at stake. The company reported roughly $1.4 billion in revenue in the first half of 2026 and said it retained about 7 cents in net profit for every dollar of revenue, according to figures released earlier this month.

The network keeps growing even as the bear case builds. USDC settled more than $36 trillion in on-chain transaction volume during the first half of the year. By June, it accounted for about 77% of all global stablecoin transaction volume, up from 60% a year earlier, according to Circle's Oct. 16 blog post.

The question for Circle now is whether distribution and settlement dominance can outrun the yield gap that AI agents are built to exploit — before 2027 forecasts turn into 2027 results.