Which Brokerage Stock Will Lead Tomorrow: Robinhood or Schwab?

By Swayta Shah | July 11, 2025, 10:20 AM

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 Robinhood

Robinhood 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 Schwab

With 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