With tech giants racing to buy up artificial intelligence (AI) hardware, Nvidia remains the market's headline act. But an under-the-radar winner has quietly posted even stronger stock performance this year. The stock? Interactive Brokers (IBKR -0.49%), an electronic brokerage that prides itself on global reach and automation. And unlike many of 2025's hype-driven stocks, its business momentum is showing up on both the top and bottom line.
As of this writing, Interactive Brokers shares are up nearly 60% year to date, versus about 39% for Nvidia over the same period. Of course, investors are more concerned about the future than the past. With that in mind, I believe Interactive Brokers is well-positioned to outperform Nvidia over the long haul.
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Incredible momentum
Interactive Brokers' scale, automation, and global reach, which all combine to give the company a competitive advantage as the low-cost operator, are paying off in impressive market share wins recently. When viewing its winning business formula, alongside a favorable equities market, it's easy to see why this company is putting up impressive growth.
Interactive Brokers' second-quarter report showed a business firing on all cylinders. Net revenue rose 20% year over year to $1.5 billion, while net income rose 24%. Impressively, the company's pre-tax profit margin for the quarter was 75% -- up from 72% in the year-ago quarter.
These strong financials were supported by amazing key customer metrics. Commission revenue increased 27% on higher trading volumes across stocks, options, and futures. Additionally, accounts increased 32% year over year to 3.87 million, client equity rose 34% to about $665 billion, and daily average revenue trades (DARTs) jumped 49% to 3.55 million. Also bolstering results, margin loans climbed 18% to $65.1 billion.
Fortunately for investors, Interactive Brokers also provides customer metrics on a monthly basis. The post-quarter cadence has since strengthened even further -- particularly in September. Last month, Interactive Brokers' DARTs reached 3.86 million, up 47% year over year and 11% month over month; ending client equity hit $757.5 billion, up 40% year over year and 6% month over month; and margin loans rose to $77.3 billion, up 39% year over year and 8% month over month. These are the lifeblood inputs for the firm's commission and interest revenue, and they improved sequentially from August's already-robust activity, setting up a healthy backdrop for the company's next earnings update, which is scheduled for the afternoon of Thursday, Oct. 16.
Why this could beat Nvidia long term
There is no denying Nvidia's excellence. The chip leader continues to post extraordinary top-line growth (revenue rose 56% year over year in its most recent quarter). But there are two key risks that arguably make it less attractive than Interactive Brokers. The first is valuation. As of this writing, Nvidia commands a price-to-earnings ratio of about 53. Interactive Brokers, by contrast, has a price-to-earnings ratio of 37. Additionally, Nvidia's business is highly cyclical. While the hype surrounding AI today would suggest that the current cycle is still in still in its early innings, there's always a chance that this AI-spending boom fades sooner and faster than expected. Additionally, the competitive environment could intensify more than anticipated, pressuring Nvidia's prices.
Of course, there are substantial risks for Interactive Brokers, too. A sharp decline in market volatility, for instance, could reduce trading activity and commissions, and a stock market sell-off could shrink margin balances and client equity. Further, lower interest rates would pressure Interactive Brokers' net interest income, which is a significant portion of its net income (second-quarter net interest income was $860 million, compared to $620 million in non-interest income). Finally, competitors could make inroads on some of Interactive Brokers' strengths, including automation and global scale.
Even when considering these risks, Interactive Brokers arguably looks like the better investment with a 10-year horizon. While Interactive Brokers faces its own substantial risks, a lower valuation arguably does a better job of accounting for these. Interactive Brokers' combination of accelerating fundamentals and a lower starting valuation gives it a credible shot not only to keep outpacing Nvidia from here, but to widen that lead over the next decade.
