Which Brokerage Stock Will Lead Tomorrow: Robinhood or Schwab?

As the investing landscape evolves at breakneck speed, two online brokerage giants — Robinhood Markets HOOD and Charles Schwab SCHW — stand at the forefront of a financial transformation targeting retail investors. Robinhood has redefined trading with its sleek, mobile-first platform and growing presence in crypto and fintech innovation. Meanwhile, Schwab remains a powerhouse in wealth management, offering a full-service ecosystem trusted by millions of long-term investors.But as technology, regulation and investor behavior shift in 2025, a big question looms: which brokerage stock is better positioned to lead the future of finance? Let’s break down the fundamentals, growth prospects and strategic moves that could determine whether HOOD or SCHW emerges as the smarter buy for forward-looking investors.The Case for RobinhoodRobinhood became immensely popular among younger generations in early 2021, riding on the meme stock wave. Nonetheless, since its IPO in July 2021, a lot has happened on the business front. It has evolved from a brokerage firm primarily trading in digital assets to a more mature and diversified entity, striving to become a one-stop shop for building generational wealth. In this context, HOOD has launched several initiatives to attract more clients and strengthen its market share. Some notable ones are Robinhood Legend (desktop trading platform) aimed at retail investors seeking more advanced trading tools; Robinhood Strategies, Robinhood Banking and Robinhood Cortex to boost the wealth management offerings; the prediction markets hub; and a credit card to expand in the consumer finance space. Further, Robinhood is expanding aggressively through acquisitions to grow and diversify its business. Recent deals include Bitstamp for crypto, WonderFi for Canadian digital assets, TradePMR for Registered Investment Advisors services and Pluto Capital for artificial intelligence (AI)-driven investing. These moves support its goal of becoming a global, full-spectrum financial services provider, with ambitions to expand into the Asia-Pacific region.However, the recent launch of stock tokens in the European Union (EU), offering tokenized access to firms like OpenAI and SpaceX, has triggered regulatory scrutiny. Lithuania’s central bank, Robinhood’s primary EU regulator, is seeking clarity on the product’s structure, while OpenAI has distanced itself. Regulators are questioning the transparency and legality of offering such tokens to retail investors.The Case for SchwabWith more than $10 trillion in total client assets and a dominant position in both retail brokerage and advisor custody, Schwab benefits from deep client relationships and recurring revenue streams. Its acquisition of TD Ameritrade (“TDA”) in 2020 solidified its leadership among retail and institutional investors.A key strength of Schwab is its diversified revenue base, which includes net interest income (NII), asset management fees and advisory services. Rising interest rates over the past two years have significantly boosted the company’s net interest margin (NIM). Also, its focus on repaying high-cost bank supplemental funding balances will drive NIM. By the end of March 2025, the bank's supplemental funding balance was down 61% to $38.8 billion from the peak of $97.1 billion recorded in May 2023. Schwab’s RIA custody business is one of the largest in the United States, and demand for independent advisors continues to grow. The integration of TDA enhanced the company’s ability to scale and serve this high-margin segment.Schwab is quietly modernizing its platform to appeal to younger investors, with improved digital tools and plans to launch spot Bitcoin and Ethereum trading by mid-2026. This move aligns with changing investor behavior, as clients seek diversification. The company’s scale and trusted platform position it well to serve as a bridge between traditional finance and digital assets, especially as cryptocurrency adoption becomes increasingly mainstream.Yet, Schwab faces risks from interest rate cuts, which could significantly reduce its NII due to a larger reliance on interest spreads. Also, rising competition from fintechs, including Robinhood, with their mobile-first and crypto-focused platforms, may limit the company’s appeal among Gen Z and millennial investors despite its recent digital moves.How Do Earnings Estimates Compare for HOOD & SCHW?Over the past seven days, the Zacks Consensus Estimate for HOOD’s 2025 earnings has been revised upward, while for 2026, it has remained unchanged.  The earnings estimates for 2025 and 2026 imply 13.8% and 22.2% growth, respectively.Earnings Estimates for HOOD Image Source: Zacks Investment ResearchAdditionally, analysts are bullish on Schwab’s prospects. The earnings estimates for 2025 and 2026 have been revised upward over the past week. The consensus mark for SCHW’s 2025 and 2026 earnings suggests 35.1% and 17.8% growth, respectively. Earnings Estimates for SCHW Image Source: Zacks Investment ResearchHOOD & SCHW: Price Performance, Valuation & Other ComparisonsThis year, shares of Robinhood have performed extremely well given the bullish investor sentiments. The stock has soared 164.9%, while Schwab has gained 25.7% so far this year. Additionally, both have outpaced the industry and the S&P 500 Index. In terms of investor sentiments, HOOD has the edge.YTD Price Performance Image Source: Zacks Investment ResearchValuation-wise, HOOD is currently trading at the 12-month trailing price-to-tangible book (P/TB) of 11.88X. The SCHW stock, on the other hand, is currently trading at the 12-month trailing P/TB of 8.17X. HOOD & SCHW P/TB Ratio Image Source: Zacks Investment ResearchThus, Schwab is inexpensive compared with HOOD. Schwab’s return on equity (ROE) of 18.31% is higher than HOOD’s 15.42%. This reflects SCHW’s efficient use of shareholder funds in generating profits.ROE Image Source: Zacks Investment ResearchRobinhood or Schwab: Which Stock is the Better Bet?Robinhood and Schwab are carving distinct paths in reshaping the future of finance. While Robinhood is leaning into innovation, crypto expansion and aggressive growth, SCHW leverages its massive asset base, stable earnings and trusted platform to deliver long-term value. HOOD may appeal to growth-focused investors energized by its rapid transformation and recent stock surge. However, it also carries higher regulatory and market risk. In contrast, Schwab stands out as the long-term pick, offering a balanced blend of scale, profitability and strategic adaptability without compromising its conservative approach. With rising earnings estimates, a lower valuation and solid returns on equity, it offers a compelling blend of reliability and growth potential in an evolving financial landscape.Currently, Schwab carries a Zacks Rank #2 (Buy), while Robinhood has a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Charles Schwab Corporation (SCHW): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks