The Motley Fool·2025-12-29 18:51Core Viewpoint - Interactive Brokers has significantly outperformed Nvidia in 2025, with a stock increase of approximately 50% compared to Nvidia's 42% gain, driven by strong account growth and business momentum [1][2]. Group 1: Business Performance - The company has experienced remarkable growth across key metrics, with customer accounts increasing by 32% year-over-year to 4.13 million and customer equity rising by 40% to $757.5 billion [5]. - Total daily average revenue trades increased by 34% to 3.62 million, contributing to a 23% year-over-year rise in commission revenue, totaling $537 million [6]. - Net interest income, the largest revenue category, rose by 21% to $967 million, supported by stronger securities lending activity and higher average customer balances [6]. Group 2: Competitive Advantages - Interactive Brokers is gaining market share through its emphasis on automation and a culture that prioritizes technology and financial discipline, allowing it to compete aggressively on pricing and achieve high profit margins [7]. - The company's pre-tax profit margin reached 79%, up from 67% in the same quarter last year, reflecting its operational efficiency [7]. Group 3: Market Position and Valuation - The stock is currently trading at a price-to-earnings ratio of about 32, which is considered premium, but the strong momentum in customer metrics suggests that the growth potential justifies this valuation [11]. - Compared to Nvidia's valuation of 46 times earnings, Interactive Brokers is viewed as having a better chance of performing well from its current level [11]. Group 4: Future Outlook - The company is expected to continue outperforming Nvidia not just in the current year but potentially over the next five years, supported by sustainable growth factors [13].