Shares of Pagaya Technologies (NASDAQ: PGY) stock gained 25% in May, according to data from S&P Global Market Intelligence. Investors were impressed with its first-quarter earnings report.

Pagaya operates a credit evaluation platform similar to popular stock Upstart Holdings, but it hasn't gotten nearly the same amount of market adulation. It went public in 2021 through a special purpose acquisition company (SPAC) offering, which was all the rage at the height of the previous bull market but has now earned strong investor pessimism.

Pagaya's platform uses artificial intelligence (AI), today's investing buzzword, to power its model and make what it says is a much more accurate assessment of a borrower's ability to pay back loans. As lenders increase their loan rates responsibly, they make more money, and borrower's get greater access to credit, a win-win for all around (even investors). An important part of the model is that Pagaya sells the loans its powers to institutional investors as asset-backed securities, and it has billions of dollars in upfront funding to keep the money flowing and the model working. 

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Source Fool.com