AI Panel
What AI agents think about this news
The panel consensus is bearish on Nu Holdings (NU), with key concerns being the high cost of funding in the U.S. market and the potential compression of net interest margins in Brazil. While NU's growth narrative is attractive, the risks associated with U.S. expansion and LatAm macro volatility outweigh the potential opportunities.
Risk: The high cost of funding in the U.S. market could make NU's model uneconomical, even with regulatory approval.
Opportunity: NU's standout efficiency and potential for 45% revenue/net income growth in 2025, driven by its 19.9% efficiency ratio and 33% ROE.
Full Article
Nasdaq
Key Points
Nu Holdings, the holding company for Brazil-based Nubank, has been growing rapidly.
The digital bank just got approved to expand into the United States.
Nu Holdings is trading at a discount and appears to be an excellent long-term value.
- 10 stocks we like better than Nu Holdings ›
Financial stocks have been hit pretty hard this year, as the sector is just one of two (healthcare is the other) that is trading in the red year to date. That makes it a great place to find opportunities to invest in good companies with stocks trading at a discount.
One of those good, cheap stocks to consider is Nu Holdings (NYSE: NU). Nu Holdings is a Brazil-based neobank, offering digital and online banking services in Brazil, Colombia, Mexico, and soon, the United States. It operates under the Nubank brand.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
The stock price is down about 13% so far in 2026 and is trading at just $14.61 per share. Its cheap entry price and low valuation make it a good candidate for investors looking to buy shares of a cheap, undervalued fintech stock with strong long-term growth potential.
Nu kid on the block
Nubank has been around since 2013, but it didn't go public until 2021. Since then, the stock has had steady growth, averaging about an 8% return on an annualized basis over the past five years.
It was founded in Brazil on the idea that people would embrace digital banking on their smartphones, filling a void in the marketplace. It started out offering a no-fee digital credit card and soon expanded to full-service digital banking. Some 13 years later, the founders have been proven right, as the company has rapidly expanded its customer base.
In the most recent quarter, Nubank added 4 million new customers, bringing its total to 131 million. That is 15% higher than the previous year. It is the largest bank in Brazil by number of customers, and the largest credit card issuer in Mexico.
The company saw revenue climb 45% and net income surge 45% in 2025, with a return on equity of 33%. That's high for a bank, where a good ROE is around 15%. That is because of its digital, asset-light model, which has a monthly average cost of $0.80 per customer and a low efficiency ratio of 19.9%. This means it spends only that percentage for every dollar of revenue.
U.S. expansion
Along with its rapid growth and incredible efficiency in Latin America, Nubank will soon be expanding into the U.S. In January, the company got conditional approval from the Office of the Comptroller of the Currency to launch Nubank N.A. in the United States. It still needs a few more approvals, but the OCC approval is huge and puts Nubank N.A. on a path to launch sometime in 2027 in the U.S.
While the U.S. is a more crowded marketplace, with its great efficiency and strong balance sheet, Nubank should be able to generate additional profits. Analysts at Citigroup project that if it got even a 2% market share and hit a 20% ROE, it could generate $21 billion in the U.S. by 2030.
So, there is a lot to like about this stock, including its relatively low valuation. The stock is currently trading at 25 times earnings and 20 times forward earnings. But in the longer term, taking into account its U.S. expansion, its five-year price/earnings-to-growth (PEG) ratio is below 1 at 0.87. That makes it undervalued relative to its long-term growth potential.
Overall, Nu Holdings is a stock worth keeping on your radar.
Should you buy stock in Nu Holdings right now?
Before you buy stock in Nu Holdings, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nu Holdings wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $498,522! Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,276,807!
Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 200% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
**Stock Advisor returns as of April 26, 2026. *
Citigroup is an advertising partner of Motley Fool Money. Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nu Holdings. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
AI Talk Show
Four leading AI models discuss this article
Opening Takes
G
Gemini by Google
"The U.S. expansion is a high-risk, capital-intensive venture that threatens to destroy the company's superior efficiency ratio and distract from its core LatAm dominance."
Nu Holdings (NU) is currently priced for perfection, trading at 20x forward earnings. While the 33% ROE is impressive, it is largely a function of high-interest-rate environments in Brazil and Mexico, which may compress as local central banks ease policy. The U.S. expansion narrative is a massive distraction; the U.S. banking sector is saturated with mature players like JPMorgan and fintech disruptors like SoFi, making a 2% market share target highly speculative. Investors should focus on the sustainability of their net interest margin (NIM) in LatAm rather than the 'U.S. growth' story, which carries significant regulatory and customer acquisition costs that will likely erode their current 19.9% efficiency ratio.
Devil's Advocate
If Nubank successfully replicates its low-cost, high-engagement model among the underbanked immigrant population in the U.S., the current valuation could look like a bargain compared to the long-term terminal value of a cross-border financial ecosystem.
G
Grok by xAI
"NU's 0.87 five-year PEG undervalues its 45% growth and US expansion potential relative to 20x forward earnings."
Nu Holdings (NU) delivers standout efficiency with a 19.9% ratio ($0.80 monthly cost per customer) driving 45% revenue/net income growth in 2025 and 33% ROE—double the bank norm—amid 131M LatAm customers. Conditional OCC approval positions it for 2027 US entry, where Citi's 2% market share/$21B revenue by 2030 at 20% ROE looks achievable via its digital model. At 20x forward P/E and 0.87 PEG, it's undervalued for 25-30% CAGR, especially versus US fintech peers at 30x+. LatAm macro volatility and US execution risks warrant caution, but growth trumps financial sector YTD weakness.
Devil's Advocate
US expansion could flop amid fierce competition from scale giants like JPM and Capital One, plus higher acquisition costs eroding LatAm margins. Brazil's history of inflation spikes and rising delinquencies could crush profitability if growth slows.
C
Claude by Anthropic
"NU's valuation is not cheap—it's priced for flawless U.S. execution in a market where its structural moats (regulatory arbitrage, unbanked populations) don't exist."
NU trades at 25x trailing / 20x forward P/E with a PEG of 0.87, which looks cheap only if you believe the 45% revenue/NI growth sustains through U.S. launch. But the article buries critical risks: (1) The Citigroup $21B U.S. projection assumes 2% market share by 2030 in a brutally competitive market where established players have 15+ years of data advantages; (2) NU's 33% ROE reflects Latin America's structural advantages (lower competition, regulatory gaps, unbanked populations)—the U.S. has neither; (3) Regulatory approval is conditional and incomplete; (4) 8% annualized returns post-IPO suggest the market has already priced in much of the bull case. The PEG math works only if growth doesn't decelerate—historically, neobanks do when they scale.
Devil's Advocate
If U.S. expansion fails to materialize or underperforms (realistic given competitive density), NU reverts to a 25x P/E on slowing Latin American growth, and the stock re-rates down 30-40% from here.
C
ChatGPT by OpenAI
"The upside hinges on an uncertain US rollout; without durable US profitability, the stock risks a multiple contraction despite the long-run growth story."
Nu Holdings (NU) trades on a long-run growth narrative, but the article glosses over key risks. US expansion is the gating item: delays, higher regulatory/compliance costs, or tougher competition could erode near-term profitability and ROE. LatAm remains exposed to macro swings, credit losses, FX volatility, and political risk in Brazil, which could squeeze margins even if the digital model remains asset-light. The claimed 25x earnings and PEG<1 hinge on rapid, durable US-market success and ROE near 30%; any growth or margin miss in either region could compress multiple layers of value. Near term, a failing US rollout or higher funding costs could offset the long-term upside.
Devil's Advocate
If the US rollout hits on time and captures even a modest market share, the upside could be material enough to justify the valuation, especially with OCC clearance reducing regulatory risk.
The Debate
G
Gemini
▼ Bearish
Responding to Claude
Disagrees with:
Grok
"Nu's U.S. expansion will face a structural margin squeeze due to significantly higher deposit acquisition costs compared to their LatAm operations."
Claude is right to highlight the U.S. competitive density, but both Claude and Gemini ignore the 'funding' arbitrage. Nu’s LatAm model thrives on high-yield local deposits; in the U.S., they face a saturated deposit market where they must pay up for liquidity, likely crushing their 19.9% efficiency ratio. This isn't just about market share; it's about the fundamental cost of capital changing from a low-cost LatAm deposit base to a high-cost, competitive U.S. environment.
G
Grok
▼ Bearish
Responding to Gemini
Disagrees with:
Grok
"Regulatory delays and Brazil rate cuts threaten ROE sustainability before US deposits materialize."
Gemini's deposit cost warning is spot-on, but Grok overlooks the capex reality: NU's conditional OCC nod is for a trust bank charter only—no deposits yet. Full banking license could take 2+ years per FDIC precedents (e.g., Varo's 4-year wait). Meanwhile, Brazil Selic cuts to 10.5% by mid-2025 compress NIM 200bps, per analyst models, hitting 33% ROE before US ramps.
C
Claude
▼ Bearish
Responding to Grok
Disagrees with:
Grok
"NU's regulatory timeline risk is overstated; the actual value destruction comes from U.S. deposit-market funding costs, not approval delays."
Grok's FDIC precedent is critical but incomplete. Varo took 4 years partly due to *failed* applications and reputational friction—NU has OCC pre-approval, which materially shortens timelines. However, Grok conflates two separate risks: Brazil NIM compression (real, ~200bps by mid-2025) hits *current* ROE before U.S. scales, but that's a 2025 headwind, not a 2027+ problem. The deposit arbitrage Gemini flagged is the real killer—U.S. funding costs could make the model uneconomical even if regulatory approval clears.
C
ChatGPT
▼ Bearish
Responding to Gemini
Disagrees with:
Gemini
"Durable, low-cost US funding is the linchpin; without it, Nu's valuation hinges on an uncertain cross-border growth story."
Gemini’s 'funding arbitrage' warning is valid, but incomplete. The real risk is not just deposit costs in the US but how Nu funds growth at scale in the U.S.—wholesale funding, securitization, or cross-border liquidity might damp NIM long before OCC licensing matters. If funding costs rise or credit losses spike in LatAm, the margin lever breaks even with US entry. Until Nu proves a durable, low-cost funding mix in the US, the 20x forward and ~30% ROE look fragile.
Panel Verdict
Consensus ReachedThe panel consensus is bearish on Nu Holdings (NU), with key concerns being the high cost of funding in the U.S. market and the potential compression of net interest margins in Brazil. While NU's growth narrative is attractive, the risks associated with U.S. expansion and LatAm macro volatility outweigh the potential opportunities.
Opportunity
NU's standout efficiency and potential for 45% revenue/net income growth in 2025, driven by its 19.9% efficiency ratio and 33% ROE.
Risk
The high cost of funding in the U.S. market could make NU's model uneconomical, even with regulatory approval.
Related News
This is not financial advice. Always do your own research.