Meet the Under-the-Radar Stock That Outperformed Nvidia Over the Past Year, Thanks to a Whopping Gain of 142%

Core Insights - Artificial intelligence (AI) is a significant driver of stock market returns, with Nvidia leading in graphics processors for data centers critical for AI development [1] - Interactive Brokers (IBKR) has achieved remarkable market performance, with a 142% stock gain over the past year, surpassing many AI stocks [2][3] Company Performance - Interactive Brokers added a record 775,000 new client accounts in 2024, bringing total client accounts to 3.34 million [4] - Client equity increased by 33% to $568.2 billion in Q4 2024, directly impacting revenue through transaction commissions [5] - Stock trading volume rose by 65$5.1 billion in total revenue in 2024, a 19.4% increase from 2023, with over $2 billion from commissions (31.7$3.1 billion from interest revenue (up 12.6%) [9] - Commission revenue is growing faster than interest revenue, which is influenced by monetary policy changes [10][8] Market Conditions - The U.S. Federal Reserve raised interest rates to combat inflation, benefiting Interactive's interest revenue, but a new cutting cycle may lead to declining interest revenue [11][12] - Lower interest rates could boost stock market activity, potentially offsetting lost interest revenue with increased commission revenue [15] Stock Valuation - Interactive Brokers' stock is trading at a P/E ratio of 31.6 based on trailing 12-month EPS of $6.93, which is higher than the S&P 500's P/E ratio of 25.2 [13][14] - Despite potential headwinds from lower interest rates, the company is expected to continue generating positive returns for long-term investors [16][17]