Is NuBank Going to Challenge SoFi in the U.S. Market?

Nu Holdings (NYSE: NU) has been a phenomenal stock to hold over the past few years, delivering fabulous gains for investors who saw its potential early on. But it's far from finished, and it's up 53% so far in 2025.

In fact, management just shared some fantastic news: It's aiming for the U.S. market. Is that going to put pressure on powerhouse digital bank SoFi Technologies (NASDAQ: SOFI)? Let's check out what this could mean for the digital banking sector.

Nu is on the offense

Nu has become a major player in Latin American banking by taking a very aggressive approach toward growth. Just getting started in its home country of Brazil, which has very high barriers to entry in banking, has been an impressive feat. It has gone from targeting the mass consumer who has been closed out of the banking system to going for the affluent consumer, challenging the handful of banks that have controlled the Brazilian banking system for decades.

Image source: Nu.

It has also entered two new markets, Mexico and Colombia. It recently became the first of its kind to receive a full banking charter in Mexico, opening up a path toward more products, greater engagement, and a huge expansion in its business. Brazil has the largest population in Latin America, while Mexico has the second largest, and Colombia is in third place. So Nu is certainly choosing the right regions to ensure the highest growth possible before expanding into smaller countries.

Nu is moving into new territory

Nu made its first international move in late December, when it announced a $150 million investment in Tyme Group, which operates a digital bank in South Africa and the Philippines. At that time, Chief Executive Officer David Velez said that Nu had already met with "dozens of teams" worldwide, and this was its opening shot. But the company has clearly set itself up for global expansion.

It has now followed that up with its application for a domestic banking license in the U.S. "This initiative is aligned with the company's intention to explore future international opportunities, evolving its regional platform into a global model," the company said in a statement. Although right now it anticipates focusing on growth in its current markets, it's setting itself up for new growth opportunities as soon as it makes sense. It calls the U.S. business "fledgling," and it's expecting to offer a slew of financial services.

Nu vs. SoFi -- a classic setup

Nu is far from the only disruptive bank in the U.S. SoFi is just one of several digital banks that are pulling market share from the big players, and it has drawn comparisons with Nu.

Pitting Nu against SoFi has mostly been in the realm of the stock market, since they operate in different regions. But if they go directly head-to-head, they would stack up against each other quite neatly, because they're both superstar neobanks with incredible long-term potential.

I think that Nu could definitely offer stiff competition for SoFi at some point. They may target slightly different populations, with Nu serving a more mass clientele, while SoFi's sweet spot is students and young professionals.

Nu is also not likely to scale too quickly, since it's in learning stages today. That gives SoFi extra time to up its game, narrow its niche, and launch more attractive products that set it apart.

However, Nu has demonstrated that it can grow quickly and profitably at scale, attracting a broad swath of the general population, and it could be a formidable global player.

Is Nu stock a better deal?

The market has been enamored of SoFi stock, which has more than doubled this year. It's much more expensive than Nu stock today, according to some metrics, and Nu looks quite cheap when factoring in expected earnings growth.

NU PE Ratio (Forward 1y) data by YCharts. PE = price-to-earnings. PEG = price/earnings-to-growth.

I think these are both excellent stocks to own, and it looks like the market sees Nu as the riskier play, which is why it's fairly cheap right now. If you have some appetite for risk and a long time horizon, Nu stock could be undervalued at this price and a great deal today.

Jennifer Saibil has positions in Nu Holdings and SoFi Technologies. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.