Mizuho: AI agents could pose up to 20% downside risk to Circle's reserve income

October 27 - Mizuho Securities, in its latest research report, lowered the target price for USDC stablecoin issuer Circle Internet Group (CRCL) from $45 to $43, while maintaining an "Underperform" rating. The firm warned that AI personal assistant engines could pose a "significant risk" to Circle's medium-term revenue.

The report noted that with the widespread adoption of AI agents, USDC's market cap could face downward pressure of $4 billion to $9 billion, and Circle's reserve income could suffer a medium-term downside risk of 10% to 20%. Mizuho's simulation showed that AI agents, including Muse, when answering "where should funds be stored," tend to recommend users move funds from USDC to higher-yielding, FDIC-insured fiat alternatives, such as savings accounts offered by SoFi. Even if users insist on staying in crypto, AI agents "seem to prefer other platforms" rather than holding USDC directly within the Circle ecosystem.

Mizuho further presented a faster AI adoption scenario: approximately $7 billion could flow to fiat products, with another $2 billion flowing to higher-yielding stablecoins, which would shrink USDC's market cap by up to $9 billion and cause Circle's reserve income to drop by 18%.

The firm also lowered its 2027 financial forecasts: reducing the expected average circulating supply of USDC from $108 billion to $101 billion, lowering reserve income expectations from $4.3 billion to $4.1 billion (a decline of about 5%), and cutting adjusted EBITDA expectations from $635 million to $603 million.