Questioning whether AI·Circle’s AI payment narrative can withstand real-world scrutiny

Text | Zhou Ailin

Editor | Liu Peng

“Circle finally helped me break even.” An overseas stock investor, Wang Song (pseudonym), told Tencent News “Qianwang.”

The “first major stablecoin” Circle went public in 2025, reaching a peak right out of the gate—on May 25, 2025, Circle opened at $69, closing near $107 on the same day, and even surged to around $200 later. Tencent News “Qianwang” also learned that many institutional investors had sold their IPO shares around $90 to lock in profits, while some individual investors bought in above $120, only to be swept up in a wave of short selling. For a long period afterward, cryptocurrencies entered a bear market, and Circle hovered around $60.

But recently, due to better-than-expected Q4 earnings, in just a few trading days (up to March 17), Circle’s stock price rose from $60 to over $125, nearly an 80% increase. The key catalyst wasn’t financial data but a mention during the earnings call by Circle’s global marketing director, Peter Schroeder: about 99% of transactions between AI Agents (AI smart entities) are currently settled using USDC (Circle’s stablecoin). Over the past nine months, AI agents have completed 140 million payments totaling $43 million, with 98.6% settled in USDC, averaging just $0.31 per transaction.

However, in reality, most AI agent settlements still occur through traditional payment systems—credit cards—not stablecoins. The 98.6% figure likely refers to on-chain experimental environments. Can the AI agent narrative really hold? Is the spring of stablecoins or even cryptocurrencies truly arriving?

“90% of AI Agents Use USDC for Payments” Is Not True

Previously, Circle’s stock fell as low as $49, with the bubble largely deflated. Based on cautious projections for 2028 (market size of $200 billion, net profit of $800 million to $1 billion), a price around $60 corresponds to less than 20 times P/E, leaving room for valuation recovery.

“Before earnings release, hedge funds had built $500 million in short positions. When earnings beat expectations and new narratives emerged, shorts were forced to cover by buying, creating a ‘passive buy + chasing high’ resonance, pushing the stock from $61 to quickly break $100,” said a foreign hedge fund source to Tencent News “Qianwang.” But what really stirs the market’s nerves is the imagination brought by AI.

Let’s first look at the AI narrative that triggered Circle’s rally.

Li Lianxuan, Director of Alliance Chuan Group and Research Assistant at the Hong Kong Polytechnic University Digital Assets and Innovation Center, told Tencent News “Qianwang” that AI smart entity payment scenarios typically have three characteristics: 24/7 operation, small high-frequency transactions, and global settlement. For example, an AI agent executing a task may need to continuously pay for API calls, compute rental, and data access. These payments are often machine-to-machine automatic settlements, with very small amounts but very high frequency. Some estimates suggest the average transaction between agents might be around $0.30.

In such cases, traditional financial systems are not well-suited. On one hand, credit cards and traditional payment methods usually have fees of 2-3%. On the other hand, cross-border bank settlements are slow and not conducive to automated programmatic calls. Stablecoins naturally have advantages in these machine payment scenarios. Therefore, a new narrative is emerging: stablecoins could become the “machine payment layer” for AI agents.

Against this backdrop, Circle’s story emphasizes three main advantages of USDC:

1. Scale and network effects of stablecoins. USDC remains the second-largest stablecoin globally, the largest in a compliant stablecoin ecosystem, with broad ecosystem integration.

2. Relatively mature developer infrastructure. Circle offers comprehensive APIs, wallets, and payment tools, making it easier to embed into AI automation workflows.

3. Clear compliance advantages. If AI commercial payment scales up, large tech companies or enterprises are more likely to choose compliant stablecoin systems rather than fully decentralized stablecoins.

However, Li Lianxuan also notes that all this is still in the “experimental” stage, or even just “imagination.” Schroeder’s mention of 99% is misleading—“OpenAI only accepts credit cards, Stripe, etc. for payments. How could stablecoins account for 99% of total payments?”

AI Narrative Is Still in Early Testing Stages

Undoubtedly, the on-chain payment market for AI agents remains very early.

Specifically, the current AI industry’s business structure is highly platformized. Whether it’s model inference, compute supply, or API calls, most services are concentrated on a few major tech platforms like OpenAI, Google, and Amazon. In this model, AI service payments typically follow this flow: user or enterprise → platform account → API call → monthly bill → settled via credit card or corporate invoice.

In other words, stablecoins currently play little role in this system. The advantages of the traditional model include centralized account management, mature payment systems, and consolidated billing for API calls. So, mainstream AI business models do not have an urgent need to shift to on-chain payments.

More critically, whether a unified stablecoin standard for the AI ecosystem will emerge remains unknown. Li Lianxuan believes that future machine payment systems might support multiple settlement assets, such as USDC, USDT, native on-chain stablecoins, or even corporate stablecoins issued by large tech firms. If no dominant USDC-based payment network forms, Circle’s advantages could be somewhat diminished.

Additionally, not all AI payment scenarios require blockchain. For example, internal enterprise API calls or cloud compute costs can be fully settled via traditional accounts.

Overall, the AI agent + stablecoin narrative is still an early story for Circle. The “AI economy” Circle envisions is essentially real-time machine-to-machine payments—an advanced technological concept of an open network AI economy.

In this vision, AI agents no longer just call services from a single platform but autonomously seek resources across the open internet—data APIs, compute power, analytical tools—and settle via micro-payments. In such architectures, payment amounts are tiny, often just a few cents or less, making stablecoins suitable for machine-to-machine settlement. The statistics Circle disclosed are based on this experimental ecosystem, not the entire market’s current state.

Is Circle Worth This Valuation?

Setting aside the AI narrative, is Circle really worth its current valuation?

The company indeed delivered impressive Q4 results—adjusted EBITDA of $167 million, up over 400% year-over-year; net profit of $133 million; EPS of $0.43, far exceeding the market’s expected $0.16.

Reserve asset interest income is Circle’s core revenue, accounting for about 80-90% of total income. The strong Q4 performance was mainly driven by this. In Q4 2025, reserve income reached $733 million, up about 70% year-over-year, mainly due to the rapid expansion of USDC circulation from about $43 billion at the end of 2024 to approximately $75 billion in the same period of 2025.

Even amid the crypto bear market, the rapid growth of USDC is driven by three factors: increased risk-averse demand during the bear market, with large funds shifting to stablecoins as “safe assets”; the RWA (real-world asset) market expanding from about $5 billion in early 2025 to around $26 billion in early 2026, with many on-chain assets using USDC for trading and settlement; and stablecoins’ cost and settlement efficiency advantages, leading more fintech firms to use USDC for cross-border payments and transactions.

It’s clear that stablecoin applications are gradually moving beyond pure crypto trading and DeFi. Early stablecoins mainly served exchanges and DeFi, but recently, their use in cross-border payments, RWA settlement, and AI agent payments has expanded rapidly. These real-world payment needs are beginning to detach stablecoin usage from crypto market cycles.

However, according to institutional forecasts, Circle’s 2026 EPS is expected to be $1.13, implying a forward P/E of about 102, which is high. About half of Circle’s revenue goes to its main distribution channel—cryptocurrency exchange Coinbase.

Currently, Circle benefits from high US Treasury yields driven by inflation fears and rate cuts expectations, which could boost interest income from reserves (mainly US Treasuries). US crypto legislation is advancing, with the Trump administration supporting digital assets, accelerating industry compliance. As the first compliant stablecoin issuer, Circle benefits directly. But after the recent surge, the current valuation seems less attractive, or the safety margin has significantly decreased.

It’s also important to consider the crypto bear market environment—Bitcoin recently rebounded near $80,000, but over the past decade, crypto markets tend to follow roughly four-year bull-bear cycles, with bear phases lasting 8 to 12 months.

Li Lianxuan also told Tencent News “Qianwang” that in recent years, the crypto industry has lacked truly groundbreaking technological innovation. Market hotspots have shifted toward meme coins and speculative assets, leading to a “PvP gambling” ecosystem that weakens long-term fundamentals. Over the past year, some US political figures and interest groups have profited massively through token issuance, with market movements often pre-empted by prior fund inflows. Such behaviors have drained liquidity and undermined investor confidence.