How Interactive Brokers Quietly Outpaced Nvidia in 2025 -- And Why This Trend May Continue

Interactive Brokers Group (NASDAQ: IBKR) has delivered a striking performance in 2025, rising approximately 50% and outshining the AI boom’s poster child. Meanwhile, Nvidia (NASDAQ: NVDA), the dominant graphics processor chipmaker, has posted a respectable 42% gain – yet found itself in the shadow of a far less glamorous online brokerage platform. I think so the market often overlooks opportunities outside the spotlight.

The Numbers Tell a Compelling Story

What’s driving Interactive Brokers’ remarkable ascent? A deep dive into third-quarter financials reveals the engine behind this success.

The brokerage’s customer base has expanded at an impressive clip. With 4.13 million accounts as of last quarter – a 32% year-over-year jump – the company continues to attract traders and investors seeking low-cost, technology-driven solutions with global market access. But account growth tells only part of the story.

Customer equity balances surged 40% to $757.5 billion, indicating that existing clients are not just staying put but actively depositing and trading more capital. Daily average revenue trades climbed 34% to 3.62 million per day, reflecting sustained engagement across the platform.

This customer momentum translated into robust revenue growth. Commission revenue jumped 23% year-over-year to $537 million. Yet the company’s largest revenue driver – net interest income – delivered even more impressive results: a 21% increase to $967 million, fueled by higher customer balances and enhanced securities lending operations.

The efficiency story is equally striking. Interactive Brokers maintained a pre-tax profit margin of 79% in Q3, up from 67% a year earlier. This expansion reflects the company’s competitive edge: its obsession with technology and automation allows it to undercut rivals on pricing while maintaining industry-leading profitability.

Why the Valuation Debate Matters

Trading at roughly 32 times earnings, Interactive Brokers isn’t trading at a bargain. By comparison, Nvidia commands a premium of 46 times earnings. Both valuations demand growth, but the sustainability question differs.

Nvidia’s current ascendancy is tethered to the graphics processing unit investment cycle and AI adoption trends. While powerful, these cycles are prone to cyclical peaks and troughs. Interactive Brokers, by contrast, benefits from secular tailwinds: the ongoing shift toward digital investing, the expansion of retail participation in global markets, and the company’s capacity to deepen client relationships through higher balances and transaction volumes.

The Headwinds Investors Should Watch

Interest rate risk represents the most significant concern. If the Federal Reserve continues cutting rates, yields on customer cash balances – a key driver of net interest income – could compress. However, the recent acceleration in net interest income (up 21% in Q3 versus 9% growth in Q2) suggests the company is partially offsetting yield pressure through customer balance growth.

Trading activity cyclicality also poses a risk. Market downturns or reduced volatility could suppress the number of revenue-generating trades on the platform, impacting commission income and daily trading volumes.

Yet despite these vulnerabilities, Interactive Brokers’ fundamentals – expanding market share, deepening customer wallets, and margin expansion – suggest the company can weather near-term headwinds.

The Outlook

I think so Interactive Brokers has genuine potential to sustain outperformance relative to Nvidia over the next five years. Its competitive advantages in automation and pricing, combined with durable secular growth drivers in online brokerage, offer a more sustainable growth profile than Nvidia’s currently euphoric AI cycle. That said, the financial services sector remains inherently cyclical, and online brokerages operate within tight regulatory and competitive environments. Any position should be sized appropriately as a higher-risk growth holding.