It's been a good year for the U.S. stock market. The S&P 500 index, which has historically generated an annualized return of about 8%, is up more than 14% year to date.
Remarkably, Robinhood Markets (HOOD 3.27%) is up by 222% this year, while SoFi Technologies (SOFI 4.48%) has soared 69%. Yes, these fintech stocks have outperformed the broader market by 202 percentages points and 55 percentage points, respectively.
It's no fluke; these companies operate in the vast financial services market sector and have delivered exceptional business growth. Both companies offer innovative platforms that have proven popular, especially with younger consumers.
But should investors buy either stock in 2026 after they've already produced such impressive returns? Here is what you need to know.
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The disruptive online brokerage aims to build on its hot momentum
Robinhood is famously popular among younger investors for its smartphone platform, and has no shortage of users, with 26.8 million funded accounts. It's a lucrative and coveted customer demographic as wealth begins to transfer from older consumers to those in their 20s and 30s over the coming decades.
The company has launched a plethora of new products and services, including prediction markets and a credit card, in the hope of attracting that wealth to its platform. As a result, Robinhood continues to grow. As of the third quarter, total platform assets have more than doubled from a year ago to $333 billion, and revenue rose by 100%.
NASDAQ: HOOD
Key Data Points
While Robinhood's explosive business growth has undoubtedly driven the stock's substantial returns, the stock has also become increasingly expensive in the process. Robinhood now trades at a lofty price-to-sales (PS) ratio of 26. The shares are almost as expensive as they were in 2021, when the broader market was in a bubble.
The company still generates more than half of its revenue from transaction-based activities, such as options contracts. It's a precarious situation, with the broader market currently at a relatively high valuation compared to its historical norms. If it were to slow, or plunge, it would likely weigh on Robinhood's business as investors cut back on options and other speculative activities. In this light, investors may want to approach Robinhood stock cautiously in 2026.
Digital bank SoFi Technologies looks capable of steady long-term growth
SoFi Technologies has been one of the most successful businesses since the pandemic. The digital bank's user base has expanded from 1.4 million in 2020 to 12.6 million today. Additionally, growth remains strong, with customers increasing by 35% year over year in the third quarter. SoFi offers a digital one-stop shop for users to bank, borrow, invest, and learn.
Sustaining such strong customer growth is impressive, and additional growth may still occur through cross-selling opportunities. Currently, the typical SoFi customer uses an average of only 1.5 products. SoFi built its name in the student loan business, but pandemic and political restraints essentially froze that business segment until just recently. It's yet another growth catalyst ahead as borrowers look to refinance their student loans.
NASDAQ: SOFI
Key Data Points
Such strong top-line growth has translated nicely into profit. Management expects full-year earnings per share of about $0.37, more than double the $0.15 per share SoFi earned last year. Additionally, management expects SoFi's tangible book value to increase by $2.5 billion this year, representing a 51% rise. Although SoFi trades at a higher price-to-book value ratio than leading bank stocks, its rapid growth is a compelling argument in its favor.
Still, SoFi's stellar year has set a high bar. The stock seems due for a breather after an epic run, so investors may want to keep expectations grounded for 2026. That's not to say that long-term investors should avoid the stock. SoFi appears to be a long-term winner if it can continue to sustain the impressive member and financial growth it has achieved during the past five years and counting.
