What They Do
Nu Holdings operates Latin America's largest digital banking platform, serving 131 million customers across Brazil, Mexico, and Colombia with no physical branches. They solve the region's banking access problem by offering credit cards, personal loans, savings accounts, and payment services through a mobile-first platform powered by proprietary AI. Revenue comes from interchange fees, interest on loans, and cross-selling financial products to their highly engaged customer base.
Investment Thesis
**Massive scale with accelerating monetization** — 131M customers generating $15 ARPAC (+27% YoY), with unused credit limits expanding 60% to $29B as AI drives smarter credit decisions**Market dominance in underpenetrated regions** — Now Brazil's largest private financial institution by customer count, with ~50% of Mexico credit card customers getting their first card through Nu**AI-powered competitive moat** — Proprietary nuFormer AI model driving credit expansion and product adoption, with Pix AI surpassing 10M monthly active usersKey Risks
**Regulatory execution risk** — Success depends on finalizing Mexico banking license and successfully launching U.S. operations following conditional OCC charter approval**Credit cycle vulnerability** — 40% credit portfolio growth and seasonal NPL upticks could pressure margins if Latin American economies weakenGrowth Story
Nu is transitioning from regional leader to global digital banking platform, with revenue growing 45% YoY to $4.9B in Q4 2025. The company added 17M net customers in 2025 while expanding ARPAC 27% through AI-powered credit expansion and cross-selling. Management calls 2026 an "inflection year" as they prepare for U.S. expansion and deepen penetration in core Latin American markets.
Profitability Profile
Nu achieved record profitability with 33% ROE and sub-20% efficiency ratio for the first time, demonstrating strong operational leverage. Gross margins of 44.8% reflect the capital-light digital model, while risk-adjusted NIM of 10.5% shows healthy lending spreads. Management expects near-term margin pressure from deliberate investments but maintains confidence in structural operating leverage over the medium term.
Competitive Position
Nu has built an insurmountable scale advantage in Latin America with 83% customer activity rates far exceeding traditional banks. Their AI-first approach and mobile-native platform create switching costs while enabling superior credit decisions and personalized products. Traditional banks struggle to match Nu's cost structure and customer experience, while fintech competitors lack the scale and regulatory licenses.
Recent Momentum
Q4 2025 delivered across all metrics with 45% revenue growth, record customer additions of 17M, and first-ever sub-20% efficiency ratio. The conditional U.S. banking charter approval in January 2026 marked a strategic milestone, validating management's global expansion thesis. Consistent earnings beats over the past four quarters demonstrate execution strength despite one-time regulatory costs.
What Wall Street Thinks
Analysts are increasingly bullish on Nu's transformation from regional player to global platform, with 2027 revenue estimates of $25.5B reflecting confidence in the expansion story. The 50.5% CY26 revenue growth estimate suggests Street belief in sustained momentum, though debates center on execution risk in new markets and investment spending impact on near-term margins.
The Bottom Line
Nu has achieved unassailable scale in Latin America and is now positioned to become a global digital banking leader, with AI-powered growth engines and regulatory approvals creating a compelling multi-year expansion story.
