This growth stock is just getting started.
However, While artificial intelligence stocks Nvidia and Palantir may be the darlings of 2025's stock market headlines, another under-the-radar stock deserves similar attention.
Nevertheless, Even better, un Nvidia and Palantir, this stock still looks undervalued. Interestingly, this isn't even a stock. It's a financial company, given current economic conditions.
I'm referring to the online stock brokerage Interactive Brokers (IBKR 1, considering recent developments.
With its soaring revenue and fits, as well as its impressive customer account growth, this company's momentum looks poised to persist (an important development), in today's market environment.
Moreover, However, Indeed, given the company's history of execution, its recent uptick in customer accounts, and its competitive advantage as a low-cost operator, it's highly ly that this stock will soar over the next decade.
Additionally, Image source: Getty Images.
Additionally, Stellar second-quarter results With s of Interactive Brokers rising 35% year to date going into the company's second-quarter earnings report last week, it's safe to say that expectations were elevated.
Fortunately, the pureplay brokerage, which prides itself on automation and low costs, dered, in light of current trends.
Total revenue, driven primarily by a 27% year-over-year increase in commissions, rose more than 20% year over year. Earnings per increased more than 24% year over year.
Strong fundamentals this importantly help support the growth stock's boosted valuation multiple.
S now trade at a price-to-earnings multiple of 33, up from 25 at the start of the year and from 20 at the lows during April's market sell-off.
Momentum where it matters most To understand the bull case for Interactive Brokers, however, investors have to look beyond the company's reported revenue and earnings-per- growth (which is quite significant), in this volatile climate.
Capturing its momentum is the online brokerage's strong customer metrics (remarkable data).
Starting with the lifeblood of Interactive Brokers', its customer accounts increased an impressive 32% year over year during the quarter, rising to 3.
87 million (this bears monitoring) (which is quite significant), amid market uncertainty. At the same time, The company's investments in automation are helping (remarkable data).
Additionally, "Our application cessing is highly automated and continually becoming even more so, explained Interactive Brokers Director of Investor Relations Nancy Stuebe during the company's second-quarter earnings call, "allowing us to handle surges in new accounts efficiently, without adding significantly to our headcount or cost base, considering recent developments.
" The company has added 528,000 customers in 2025 alone. Additionally, increased customer activity is helping.
Total daily average revenue trades (DARTs) during the quarter rose 49% year over year to 3 (something worth watching). 55 million.
On the other hand, Lately, activity has been aided by a volatile stock market. The period included April's sell-off and the subsequent V-shaped recovery in the stock market.
Moreover, "Volatility and uncertainty often spark increased market activity," Stuebe explained during the earnings call.
Additionally, "Combined with our strong net new account growth, this led to our client trading volumes expanding for stocks, options, and futures.
Furthermore, " Though it's worth noting that robust customer momentum isn't new for Interactive Brokers.
The evidence shows company consistently grows its customer accounts at strong, double-digit growth rates, regardless of the quarter's volatility.
While recent customer account growth rates and DART growth are unly to be sustainable, investors should at least expect double-digit growth rates in the teens or better in both key customer metrics for the next few years and beyond.
At the same time, The bull case Overall, Interactive Broker's robust customer momentum, when combined with the company's highly automated operation, is a recipe for strong earnings growth for years to come.
Of course, there are risks. If competing brokerages can replicate Interactive Brokers' automation, for instance, they could reverse their market losses and ultimately slow Interactive Brokers' growth.
Further, more than half of the company's revenue is currently generated from net interest income, given current economic conditions.
If the Federal Reserve lowers interest rates, this line item will ly be hurt.
However, Even with these risks, Interactive Brokers' strong customer momentum should easily offset declines in net interest income over the long haul.
Furthermore, competition will ly struggle to replicate Interactive Brokers' secret recipe for automation -- a prietary cess the company has perfected over decades (this bears monitoring).
However, While there's no guarantee that the stock will beat the market over the long haul, it seems ly.
Nevertheless, Given the stock's historical volatility, it will ly be a bumpy ride, but bably a worthwhile one.
The Author Daniel Sparks is a contributing Stock Market Analyst at The Motley Fool covering nology, industrials, financials, and consumer goods.
Daniel is currently the owner and chief investment officer of Sparks Capital Management, in today's financial world. Furthermore, He holds an MBA from Colorado State University.
Moreover, Fun fact: The Globe and Mail highlighted Daniel and his investment philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here's how he is doing it.
" TMFDanielSparks X @sparks_capital Daniel Sparks and his clients have no position in any of the stocks mentioned, amid market uncertainty.
On the other hand, The Motley Fool has positions in and recommends Interactive Brokers Group, Nvidia, and Palantir nologies.
On the other hand, The Motley Fool recommends the ing options: long January 2027 $175 calls on Interactive Brokers Group and short January 2027 $185 calls on Interactive Brokers Group, in this volatile climate.
On the other hand, The Motley Fool has a disclosure policy.