The S&P 500 is a prestigious market index that includes 503 stocks from 11 different economic sectors. It has a very strict entry criteria, which requires companies to be profitable and to maintain a market capitalization of at least $22.7 billion. But even after clearing those hurdles, a special committee still has the final say over which companies make the cut.
Interactive Brokers (IBKR 1.80%) operates a global investing platform where its clients can buy and sell stocks, futures contracts, options contracts, cryptocurrencies, and more. The company was admitted into the S&P 500 last August thanks to its rapid growth, and its surging market cap, which now stands at over $130 billion.
In fact, Interactive stock soared by 45.6% last year, crushing the S&P 500, which climbed by just 16.4%. Here's why I think it could beat the market again in 2026.
Image source: Getty Images.
Interactive's key operating metrics are setting records
The S&P 500 is coming off three consecutive years of above-average returns, and bull markets this powerful tend to attract hordes of new investors. As a result, it's no surprise that Interactive had a record 4.4 million client accounts at the end of 2025, which was a 32% increase from the year-ago period.
Customer equity also soared by 37% to $779.9 billion over the same period, which represents the total value of all cash and securities held in client accounts. Since Interactive earns commissions based on the value of every stock, futures, options, and crypto transaction executed by its clients, higher equity translates into more revenue.
On that note, trading activity continues to surge on Interactive's platform. During the fourth quarter (ended Dec. 31), the company processed an average of 4.04 million transactions every single day, representing a 30% year-over-year increase.
Plus, the value of outstanding margin loans soared by 40% to $90.2 billion during the quarter. This is a sign that clients remain extremely bullish, because investors typically only borrow money to buy stocks and other securities when they feel confident the market is going higher. It doesn't mean they are right, but margin lending is great for Interactive because it earns commissions when that money is put to work, and it also earns interest for the life of every loan.
Interactive had a strong year at the top and bottom lines
Interactive generated a record $6.2 billion in revenue during 2025, which was a 19.5% increase from the previous year. That figure had two primary components:
- Commission revenue, which is the money Interactive makes by processing client transactions. It grew by 26.6% during 2025 to $2.1 billion, reflecting strong trading activity.
- Net interest income, which is the interest Interactive earns on its own cash, on the cash it's holding for clients, and on margin loans. It grew by 13.2% during 2025 to $3.5 billion.
The company generated a further $493 million in other income and service fees during the year.
It also had a great year at the bottom line, fueled not only by its strong revenue growth, but also by a minor reduction in its overall operating expenses. It generated earnings of $2.22 per share, which was a 28.3% jump from the previous year.
Interactive Brokers stock might be poised for further upside
The stock trades at a price-to-earnings ratio (P/E) of 34.9 as I write this, which is a premium to the 26.6 P/E of the S&P 500, and even the 32.6 P/E of the Nasdaq-100. I'm not surprised investors are willing to pay up to own a slice of this company given how quickly it's acquiring new clients and growing its fee base (in customer equity).
NASDAQ: IBKR
Key Data Points
However, there is one potential headwind on the horizon. The Federal Reserve has cut interest rates six times since September 2024, with two more cuts potentially on the way in 2026, according to the CME Group's FedWatch tool. This will be a drag on net interest income, which, as I highlighted earlier, is the company's largest source of revenue.
The only reason declining interest rates haven't caused the company's net interest revenue to shrink so far is because its interest-earning assets have grown so quickly. Remember, the company's margin-loan book ballooned by 40% last year, and the huge influx of clients also brought significant amounts of cash to the platform. There is no guarantee this dynamic will persist, which I think is a key risk right now.
With all of that said, Interactive stock could outperform the market yet again in 2026 if present conditions continue. The stock is up 20% in January so far, compared to a mere 1% gain in the S&P 500, so it's already in great shape.
