XP Could Soar If These 2 Things Go Right

In the roughly $117 billion global banking investment market, companies based in more established markets tend to capture all of the attention. Yet looking beyond those standard operators can reveal investable opportunities, as some of the fastest-growing financial platforms are emerging from markets that are often afterthoughts to U.S. investors.

Brazil-based XP (NASDAQ: XP), which calls itself a "one-stop shop" for financial solutions, is one such company. It offers brokerage accounts, advisory services, offshore investments, and asset management, as well as retail and wholesale banking services. It also boasts nearly 5 million clients and completes 50,000 fixed-income transactions per day. Against that backdrop, two key factors could determine where its stock price goes next.

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Asset growth and ecosystem expansion

In the fourth quarter of 2025, XP reported total assets of a little more than 2 trillion reals ($400 billion), up 22% year over year. Its assets under management and assets under administration climbed 35% and 44% year over year, respectively, in the quarter. That spotlights a diversified economic base that the company can continue to build upon. If XP can keep expanding that asset pile, it will strengthen its competitive position in Brazil.

Clients who manage more of their wealth through XP are likely to be more engaged with its advisors, and to stick with the financial services company. The strength of its asset growth is also a talking point for attracting new customers.

Ecosystem expansion plays right into that asset growth, too, as the company enjoys many cross-selling opportunities across insurance, retirement, and credit cards.

Rising profitability

XP's net income climbed 10% in Q4 to 1.3 billion reals ($247 million), while full-year net income jumped 15% to 5.2 billion reals ($990 million). If it can continue its recent streak of profitability, that could go a long way toward convincing the markets that its results will be durable.

To keep the bottom line climbing, the Brazilian company is tapping into artificial intelligence (AI) to augment, rather than replace, its advisors. XP wants its advisors to drive more value by spending more time with clients and less time on operational work.

As more clients adopt wealth‑planning tools and sign up for other products in XP's growing ecosystem, the company will be able to generate higher recurring revenue without increasing costs.

The road ahead

The long-term picture for XP looks promising, and its forward price-to-earnings ratio (P/E) of about 10 is attractive. While it's not a perfect comparison, U.S.-based peer Charles Schwab trades at a forward P/E just above 16.

With everything above in mind, there are a few details to consider before adding XP to your portfolio. Since the closing bell of its first trading session in 2019, its shares are down by 41%. That slump was driven by a combination of post-IPO overvaluation and Brazil's high interest rates. For 2026, CEO Thiago Maffra also expects a "challenging environment."

XP may appeal to patient investors who have a higher risk tolerance, but anyone who buys these shares should be prepared for bumps along the way.

Charles Schwab is an advertising partner of Motley Fool Money. Jack Delaney has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short March 2026 $100 calls on Charles Schwab. The Motley Fool has a disclosure policy.