Dan Ives: "We're Still in the Third Inning of AI Revolution” (2 Top Stocks Under $50 To BUY Now)

Dan Ies believes we're still in the third inning of the AI revolution despite the recent selloff in AI and semiconductor stocks and growing competition from new AI models coming out of China. In today's video, you'll first watch Dan Ies's interview completely uninterrupted. Then I'll break down everything he said, share my own take on his biggest points, and explain what I think investors should really pay attention to. Finally, I'll reveal two top stocks under $50 that could offer tremendous long-term upside despite recent pullbacks. Now let's hear what Dan Ies has to say >> for the benefit of our audience new position. What kind of speak seat are you speaking from? >> Yeah. So uh again partner and and really be uh you know on a research perspective that's going to be my main role at Yorkville Ives but it's a modern merchant bank. I mean this is something for me 25 plus years on Wall Street. It's the evolution. It's a next step. It's something to really build something that I think is going to be special in this market but really focused in terms of sectors. AI, tech, infrastructure, energy, because where I view the fourth industrial revolution. So excited to do this and found just the the best partners to do it with >> these companies are borrowing a lot of money. They're spending a lot of money. The questions we're asking this morning based on developments out of China is whether they're borrowing too much and spending too much. What's your reaction to what we've heard from China? >> I think this is just a called a white knuckle moment, no different than a mini deepseek moment to some extent. The reality is like look models you're going to have 10x more models over the next five seven years vertical geographic the reality is is that it's anthropic in open AI's world and everyone else paying rent relative to the models Gemini clearly narrowing the gap China you're going to continue to see you know very good models come out of there but it's my view when you talk about broader spending the trillions of dollars spend that you're going to see in AI It's less about the models. It's about the data. It's about ultimately the buildout. And I think that is something that will get validated to Q earnings. >> But doesn't this show that China is not that behind the United States? They're neck and neck when it comes to AI development. >> I think for the first time in 30 years, it's not even a question that US is ahead of China when it comes to tech. Now when it comes to models in terms of the more of a commodization open source in the way that they're going after it are they ahead when it comes to robotics when it comes to energy yeah but there's one chip in the world fueling the AI revolution godfather of AI gentia and I think what you see from hyperscalers what you see from open AI and anthropic this is going to be an arms race but I don't even think there's a question where the US is relative to China when these moments happen you'll see jitters white knuckles stocks will sell up. >> Why is China able to do it cheaper? >> Because at the end of the day, the open-source model, if you look, whether it's Deep Seek or any others, when you compare it to what Anthropics doing to what Open AI is doing, that's tip of the sphere. In other words, Open AI and Anthropic, they're going after the enterprise market. The models are just really the start of what the broader sort of end-to-end framework is going to be. When you think about where the vast majority of spending is going to be in AI, it's not necessarily in the models. It's in the data, the data center buildouts, the capbacks, the what ultimately is going to be physical AI. I just continue to view commoditization will continue to happen on the models. I don't get as sort of, you know, nervous when when moments like this happen. >> The spending phase, can we talk about the end phase? And I know this is really difficult to do. Where do you think the money is ultimately going to be made? The application lay, the infrastructure layer. Where do you think the money will be made? >> I think it's it's the application infrastructure layer that's going to really be the hearts and lungs because if you think about today all the data centers getting built, those data centers are going it'll be like a a factory for cars. You build out the factory but now you actually need the lines. What's the operation? The when you look at as more and more companies on the use cases, that's enterprise, that's software, that's use cases. Are you confident the app layer won't become commoditized? >> I would tell you the more and more companies that I talk to that are deploying AI and going down the AI path. I feel that that's become less and less of a risk. There'll be winners and losers. There'll be ones where ultimately they're on the wrong side of it and maybe some of those stocks are reflecting some of the nervousness. But the view today is that look, we're still in the third inning of the AI revolution. Now we start off, we're in the second inning. This is not seventh, eighth inning because of where this is all going in terms of physical AI. Look what Apple's doing. That's just starting the consumer AI revolution where they're essentially a toll booth in the AI highway. >> What's going on with Alphabet and Gemini? Why are they behind? >> I I I view that in terms of everything that they're doing. They'll be behind at points, but the reality is that their endto-end framework from cloud to Gemini to what's happened on search, they could catch up pretty quickly. And I just think they've narrowed the gap much more than anyone would have thought. And it goes back to a year ago, New York City cab drivers bearish in Alphabet. Look where they are today. And maybe >> where are they? Where are they today? >> I say New York City cab driver is still bearish. Maybe they're bearish on Microsoft versus where, you know, >> I think you've got to come up with a new phrase because in my experience with my New York City cab drivers, they they're better on this market than most people I speak to on a daily basis. >> And that's very healthy because of ultimately more and more retail. >> They're long and strong. >> They they they have a big seat at the table. And I know New York City cab drivers now they're driving Bentleys because of this market, >> right? They'll be sent I remember years ago they'd be like, I really like Tesla. I'd be like, what this multiple? That's crazy. And then Tesla just like to the moon up and to the right. And that's why a lot of them are driving Bentleys today. >> Yeah. >> Or Cyber Trucks. >> Or Cybert trucks. >> And many of them don't know where they're going anymore, which is um its own problem. Problem is, >> you notice that they hand you the phone now to like I had recently even worse. A taxi driver took my phone and said, "Do you mind if I keep it up here?" And I just thought he needed it for 5 minutes. I was like, "I need it back. I have calls coming in." He's like, "I need it for the whole ride." >> And then there's times you're like, "Why are you taking the Holland tunnel? You should be taking a look." And then you have to actually start to know where they go. It's look, it's it's an issue. >> I know, Dan. It's good to see you. Great. >> Thank you, sir. No dress code at Yorkville. >> We're going to we're going to be dressing more and more color at Yorkville Ives. Do they know that? >> They do know that. And I think this is all a process for some of them. >> All right. Interesting. >> It's quite a process. All right. Best of luck, Dan. Thank you. It's good to see you. >> In this interview, Dan Ies is speaking from a very different position than what many investors have been used to seeing over the last couple of decades. After more than 25 years on Wall Street as one of the most recognizable technology analysts, he has moved into a new role at Yorkville Ives, where he describes the firm as a modern merchant bank focused on artificial intelligence, technology, infrastructure, and energy. Dan begins by explaining why he joined Yorkville Ives. Rather than simply remaining an equity research analyst, he now wants to help build companies and invest directly in the industries he believes will define the next decade. Those industries are artificial intelligence technology infrastructure, and energy. I actually think that's an important signal in itself. When someone who has spent decades analyzing technology companies decides they would rather help build businesses around those trends instead of simply writing research reports, it tells you something about how significant they believe this technological shift really is. For Dan, AI is not another temporary technology boom. He genuinely believes we are living through another industrial revolution. The conversation quickly shifts toward one of the biggest questions investors have been asking lately, China. The hosts ask whether companies are spending too much money on AI after recent developments coming out of China. Every few months, it seems like another Chinese AI model grabs headlines by claiming similar performance at lower costs. And naturally, investors begin wondering whether American companies are wasting hundreds of billions of dollars. Dan immediately dismisses the panic. He calls it another white knuckle moment, comparing it to previous market scares such as the Deepseek headlines. His point is that these short-term fears may cause stocks to sell off temporarily, but they do not fundamentally change where AI is heading. According to Dan, over the next 5 to seven years, there won't just be a handful of AI models. There will be 10 times more. Some will specialize in healthcare. Others will focus on finance. Others will target manufacturing education engineering legal work, customer service, robotics, and nearly every industry you can imagine. In other words, the AI model itself gradually becomes only one small piece of a much larger ecosystem. And honestly, I think this is one of the strongest points he makes during the interview. Today, most investors focus almost entirely on whichever chatbot is currently winning the benchmark tests. Who has the smartest model? Who scored higher? Who generated the better response? But businesses don't really buy benchmarks. Businesses buy complete solutions that actually improve productivity and make money. That distinction becomes very important. Dan argues that while models receive all the media attention, the real investment opportunity is much larger than the models themselves. He says the trillions of dollars that companies will eventually spend on AI are not primarily going toward building language models. Instead, they'll be spent on data, infrastructure, computing power, networking, and physical AI. That is where he believes investors should keep their attention. The interviewer pushes back with an interesting question. Doesn't China's progress prove that China is catching up with the United States? Dan's answer is surprisingly firm. He says that for the first time in roughly 30 years, he believes there is no serious question that the United States still leads China in technology. Now, he does make an important distinction when it comes to open-source models and commoditized AI systems. China is producing extremely competitive products. He openly acknowledges that. He also admits China has strengths in robotics and energy, but where he believes America still dominates is at the very top of the AI stack. His argument centers around Nvidia. He calls Jensen Huang the godfather of AI and points out that Nvidia's chips remain the engine powering virtually the entire AI revolution. Whether you're talking about OpenAI, Anthropic, Microsoft, Amazon, Google, Meta, or countless startups, Nvidia hardware remains the common denominator. That is a point many investors sometimes overlook. When people debate whether OpenAI will beat Anthropic or whether Gemini will beat ChatGpt, Nvidia often wins regardless because all of these companies require enormous computing power. That's one reason Nvidia has become one of the biggest beneficiaries of the entire AI race. Personally, I think it's difficult to disagree with that assessment. Although, I would add one important caveat. Technology leadership doesn't stay permanent forever. History is full of companies that once looked untouchable before competitors eventually caught them. Intel dominated processors. Blackberry dominated smartphones. Cisco once seemed impossible to challenge. The lesson for investors is that today's leader isn't guaranteed to remain tomorrow's leader. Right now, Nvidia clearly has a massive advantage, especially because of Cuda, its software ecosystem, developer adoption, networking products, and complete AI platform. But smart investors should always keep watching for potential shifts rather than assuming leadership can never change. The interviewer then asks another question many investors have wondered. If China can build AI models much cheaper, why are American companies spending hundreds of billions? Dan's explanation is actually pretty straightforward. He believes Chinese companies are largely competing through open-source models. Meanwhile, companies like Open AI and Anthropic are targeting enterprise customers that require much more than just a chatbot. Large businesses need security. They need compliance. They need private data integration. They need custom workflows. They need software tools built specifically for their operations. Those capabilities require enormous investment beyond simply training a language model. That's why Dan keeps repeating that the model itself is only the beginning. The bigger opportunity lies in everything built around it. He points toward data centers, capital expenditures, networking, storage, physical AI, entire enterprise systems. Essentially, he's arguing that investors who only focus on language models are missing most of the AI story. I actually think that's becoming increasingly obvious as we move through 2026. A few years ago, everyone thought whoever built the smartest chatbot would automatically dominate AI forever. Now, we're seeing that enterprise adoption involves much more than simply asking questions inside an AI assistant. Companies want AI integrated into accounting, manufacturing, supply chains, customer service, healthcare, legal departments, engineering workflows, cyber security. Those integrations require enormous infrastructure investments that extend far beyond the model itself. The conversation then moves into what I found to be one of the most interesting discussions. The interviewer asks where the money will actually be made. Infrastructure applications models. Dan's answer is very clear. He believes the application and infrastructure layers will ultimately become the heart and lungs of the AI economy. He uses a factory analogy. Building data centers is like building an automobile factory. Constructing the building is only the beginning. Eventually, you need assembly lines workers machines operations processes, production. The same applies to AI. Building massive data centers creates capacity, but then businesses need software that actually uses that computing power to solve real world problems. That's where applications enter the picture. This is another point where I find myself largely agreeing. History has shown that platform technologies often create multiple waves of winners. During the internet boom, networking companies initially benefited, then cloud companies, then e-commerce, then software, then social media, then streaming, then digital advertising. AI could follow a similar pattern. Infrastructure providers may benefit first. Application developers could become the next major winners. Enterprise software companies may unlock huge productivity gains. Robotics companies could eventually transform manufacturing. Healthcare companies may revolutionize diagnostics. Financial firms could automate enormous portions of their operations. The AI economy is unlikely to produce only one winner. It will probably create an entire ecosystem. The interviewer then asks whether application companies could themselves become commoditized. Dan says his confidence has actually increased that this won't happen. The more businesses he talks with, the more convinced he becomes that companies deploying AI are creating meaningful competitive advantages. Of course, he acknowledges there will still be winners and losers. Not every AI company will succeed. Some stocks already reflect investor concerns that they may end up on the wrong side of this technological transition. That's a really important reminder. Just because AI is transforming the economy doesn't mean every company with AI in its presentation becomes a great investment. We've already seen hundreds of businesses simply attach the words artificial intelligence to their marketing while offering very little actual innovation. Separating genuine competitive advantages from marketing hype will probably become one of the biggest challenges investors face over the next several years. Dan then returns to one of his favorite analogies. He says we're only in the third inning of the AI revolution. Not the seventh, not the eighth. Still very early. That analogy has become one of his trademarks. But it also captures how optimistic he remains. He believes consumer AI is only beginning. Enterprise AI is still developing. Physical AI has barely started. Robotics has enormous room to grow. In his view, the biggest gains may still lie ahead. One company he specifically mentions is Apple. Rather than viewing Apple as simply another AI competitor, he describes it as becoming a toll booth on the AI highway. That's an interesting way of looking at Apple's strategy. Instead of necessarily trying to build the most advanced language model, Apple can leverage its enormous installed base of devices to distribute AI services across hundreds of millions of users. Whether Apple ultimately becomes the leader remains to be seen, but its ecosystem certainly gives it a unique advantage that very few companies can match. The discussion eventually turns toward Alphabet and Gemini. The interviewer suggests Alphabet may be falling behind. Dan doesn't completely disagree. He admits Alphabet trails the leaders today, but he also believes the gap has narrowed much faster than many investors expected. He points out that Alphabet's cloud infrastructure, Gemini platform, and search ecosystem provide a complete endto-end framework that could allow the company to catch up surprisingly quickly. I think that's another fair observation. Just a year or so ago, many investors believed Google had completely missed the AI race. Today, the conversation feels very different. Gemini continues improving. Google Cloud remains one of the fastest growing cloud businesses. AI overviews have become integrated into search. Workspace continues adding AI capabilities. Whether Google ultimately wins or not is still uncertain, but it's definitely no longer being dismissed the way it was early in the AI boom. The interview ends on a much lighter note. Dan jokes about using New York City taxi drivers as a market sentiment indicator. years ago, they were bullish on Tesla before many professional investors believed in it. Today, he jokes that some of them are driving Bentleys thanks to the stock market. The hosts laugh about taxi drivers relying entirely on GPS rather than memorizing city streets, and the conversation wraps up on that humorous note. Looking at the interview as a whole, I think Dan Ies delivers one consistent message from beginning to end. Don't let short-term headlines distract you from the long-term AI investment story. Every time a new Chinese model appears, every time markets panic, every time investors question spending levels, he believes the bigger picture remains unchanged. AI infrastructure continues expanding. Enterprise adoption continues growing. Capital spending continues increasing and the companies enabling that transformation still have enormous opportunities ahead. Now, whether you agree with every prediction or not, I do think there's an important lesson here. Markets often become obsessed with the newest headline while forgetting the broader trend. The biggest investment winners are often determined over years, not days. That doesn't mean every AI stock will succeed. Far from it. There will absolutely be disappointments. Some companies will fail to execute. Others may lose market share. Valuations can become excessive. Competition will intensify. But if Dan Ies is right, then we're still closer to the beginning of the AI revolution than the end. and investors who focus on long-term structural trends instead of reacting to every headline may ultimately be the ones who benefit the most. Now, let me show you the top two stocks trading under $50 that could offer great long-term upside despite recent pullbacks. The first company is SoFi Technologies, ticker symbol Sofi. When most people think about banking, they picture legacy financial institutions with thousands of physical branches, outdated technology, and slow innovation. But the next generation of banking is increasingly moving online where customers expect to manage everything from checking accounts to investing borrowing insurance and retirement planning through a single mobile app. That shift is exactly where SoFi has positioned itself. Rather than simply becoming another online lender, SoFi has steadily evolved into a full financial ecosystem. The company's strategy is to attract customers with one product and then gradually expand the relationship over time by offering additional financial services. That cross-selling strategy has become one of SoFi's biggest competitive strengths because acquiring new customers is expensive. While selling additional products to existing customers is far more profitable. This is what makes SoFi business model particularly interesting. Instead of constantly chasing new users, management is increasingly extracting more value from every customer already inside its ecosystem that creates stronger customer loyalty while improving profitability over time. This strategy is beginning to show up clearly in the numbers. During the first quarter of 2026, Sophie generated revenue of approximately 1.10 billion. That represented year-over-year growth of just over 6% while also beating analyst expectations by nearly 5%. At first glance, 6% revenue growth may not sound spectacular, but looking only at revenue would completely miss the bigger story. Profitability is improving much faster. GAP net income reached $166.7 million during the quarter, more than doubling compared to the same period a year ago. For investors, that is a very important milestone. Many high- growth fintech companies spend years chasing growth without ever proving they can consistently generate meaningful profits. SoFi is increasingly demonstrating that it can do both. Its earnings per share came in at 0.12, matching analyst expectations while continuing its path toward stronger long-term earnings power. One area that impressed me even more was loan originations. Loan originations reached a record 122.18 billion during the quarter. That represents an incredible 68% increase year-over-year. Think about what that says regarding customer demand. Despite higher interest rates over the past couple of years and increased economic uncertainty, SoFi continues attracting borrowers while growing its overall lending business at an impressive pace. Equally encouraging is what happened with membership growth. Members increased 35% compared to last year. Growing customers is always important, but what really stood out was another statistic. 43% of new products were adopted by existing members. That number tells us customers are not simply signing up for one service before disappearing. Instead, they're gradually using more of SoFi financial products. That could mean someone initially opens a checking account. Later, they refinance a loan. Then, they begin investing. Eventually, they open retirement accounts or use additional financial planning services. Every additional product strengthens the relationship while increasing lifetime customer value. Personally, I believe this is one of the most underrated metrics investors should be watching. Customer acquisition gets all the headlines. Cross buying often creates the real economic engine. If customers trust the platform enough to keep adding services over several years, that usually reflects a business delivering genuine value. Another major positive involves deposits. Deposits climb to more than $40 billion. More importantly, those deposits now fund over 90% of SoFi s liabilities. Why does that matter? Because customer deposits are generally a much cheaper source of funding than relying heavily on wholesale borrowing. As deposits continue growing, SoFi s cost of funds continues falling. Management reported that funding costs declined by 48 basis points. Lower funding costs eventually translate into stronger profit margins, giving the company more flexibility to compete aggressively while still expanding earnings. This becomes particularly valuable if interest rates remain volatile over the next several years. CEO Anthony Notto summed up the quarter by saying the company delivered durable growth driven by relentless innovation and brand building. Looking beyond one quarter, management expects adjusted revenue of approximately $4.65 billion for the full year while projecting adjusted earnings per share around $0.60. Those guidance numbers suggest management remains confident that the business momentum continues. Analysts also appear optimistic. The current consensus price target sits around $20.58. Considering the stock recently traded around $16.84 after falling nearly 39% year-to date and sitting well below its 52- week high of $ 32.73, investors are beginning to ask whether the market has become too pessimistic. Sometimes the best investment opportunities appear after strong businesses experience significant corrections. That does not automatically make every declining stock attractive. But when the underlying business continues improving while the share price falls sharply, it deserves closer examination. Now let's talk about why the stock has fallen. Every investment has risks and ignoring them rarely ends well. One concern involves SoFi s technology platform segment. Revenue from that business declined 27% following the departure of a major client. Losing a large customer is never ideal because it raises questions about future growth within that segment. Management will need to demonstrate they can replace that loss business over time. Another issue involves credit quality. Personal loan charge offsc to just over 3%. While that remains manageable, investors should continue monitoring consumer credit trends. If the economy weakens significantly or unemployment rises, loan losses could increase further. Since lending remains an important part of SoFi s business, credit performance deserves close attention every quarter. There's also the valuation question. Although the stock has corrected sharply this year, it still trades around a forward price to earnings multiple near 31. That is not outrageously expensive for a company still growing rapidly and improving profitability, but it certainly means investors are paying for future execution. If management fails to deliver on growth expectations, the valuation could compress further. That said, I think there is another way to look at this business. Many investors still categorize SoFi primarily as a lender. I think that misses the bigger picture. Increasingly, SoFi resembles a financial operating system. Its goal is not simply making loans. Its goal is becoming the primary financial relationship for millions of consumers. If management succeeds, lending becomes only one piece of a much larger ecosystem built around banking, investing insurance retirement planning, and financial services. Businesses with ecosystem advantages often become significantly stronger over time because every new service increases customer retention while creating additional revenue opportunities. That flywheel effect can become incredibly powerful. Another aspect I find encouraging is management itself. Anthony notto has consistently emphasized long-term execution rather than chasing short-term excitement. His focus on innovation, customer acquisition, operational efficiency, and cross-product adoption appears to be producing measurable results. While no management team executes perfectly every quarter, consistency over multiple years matters far more than one exceptional period. Investors should also recognize that digital banking remains a relatively young industry. Consumer behavior continues shifting toward mobile first financial services. Younger generations increasingly expect seamless digital experiences rather than traditional banking relationships. That secular trend still appears intact. If SoFi continues expanding products, improving profitability, lowering funding costs, and deepening customer relationships, today's valuation could eventually look far more attractive than it appears at first glance. Of course, that outcome is not guaranteed. Execution remains critical. Credit quality must remain under control. technology platform growth needs improvement. Management must continue proving that cross-selling and member engagement remain durable. But when I step back and evaluate the overall picture, I see a company whose underlying business appears stronger than its recent stock performance suggests. Sometimes markets become overly focused on short-term concerns while overlooking long-term business momentum. Whether SoFi ultimately becomes one of the biggest winners in digital banking remains to be seen. But based on the operational improvements, expanding profitability, growing member base, stronger funding profile, and long runway for digital financial services, I certainly believe it deserves serious consideration from long-term investors looking for quality businesses trading well below their previous highs. If this resonates with you, you're exactly who this channel is for. Please hit the like button, share the video, and leave your thoughts in the comments. Subscribe to the channel so you don't miss out on the next important financial investing update. Remember to do your own research before you invest in any stock. The second stock on our list is New Holdings, ticker symbol NU. If you've spent any time looking for high- growth financial companies over the past few years, chances are you've come across New Holdings. But what makes this business particularly fascinating is that it isn't simply another digital bank trying to steal customers from traditional financial institutions. It's helping reshape banking across Latin America, where millions of people have historically been underserved or completely excluded from the traditional financial system. That creates an opportunity that is much larger than simply winning market share from existing banks. In many cases, new is introducing consumers to modern banking for the very first time. Think about that for a moment. In developed markets, most people already have checking accounts, credit cards, investment accounts, and access to financial services. Growth often comes from convincing customers to switch providers. New is operating in markets where financial inclusion itself continues expanding. That is a fundamentally different growth story. Instead of fighting over a fixed pie, the overall pie continues getting bigger. That distinction is one of the reasons many long-term investors remain excited about this company despite its recent pullback. As of July 17th, new holdings traded around $13.60 per share. The stock has fallen roughly 20% year-to date, although it has recovered modestly over the past month. For investors who believe the underlying business remains healthy, that decline may represent an opportunity rather than a warning sign. And once you examine the financial results, it's easy to understand why optimism continues surrounding the company. During the first quarter of 2026, new generated an impressive $4.97 billion in revenue, representing 57.9% year-over-year growth. That is remarkable growth for any financial institution, especially one that has already reached enormous scale. What's even more impressive is that this growth isn't coming at the expense of profitability. Net income reached approximately $871.4 million during the quarter. Many companies can grow quickly. Far fewer can grow quickly while simultaneously generating nearly a billion dollars in quarterly profit. That combination is what separates businesses with durable competitive advantages from companies simply chasing growth at any cost. Another figure that immediately caught my attention was the company's adjusted return on equity of 31%. Return on equity is one of my favorite metrics because it measures how effectively management generates profits using shareholder capital. 31% is an exceptional number. Businesses capable of sustaining high returns on equity over long periods often become incredible wealth creators because they continuously compound capital at attractive rates. Of course, investors should never rely on one metric alone, but seeing strong profitability alongside rapid revenue growth certainly strengthens the investment thesis. Then there's customer growth. New now serves approximately 135 million customers. Just stop and think about how large that number really is. that's larger than the population of many countries. Building trust with that many people is incredibly difficult in banking because consumers rarely switch financial providers unless they're receiving a meaningfully better experience. The fact that new has continued expanding its customer base at this pace suggests its products are resonating with consumers. But management isn't simply adding users, they're increasing the value of each relationship. Monthly average revenue per active customer climbed to $15.90. That tells us customers are using more products and generating greater revenue over time. We've already talked about this concept with SoFi, and it's equally important here. The best financial platforms don't just acquire customers. They deepen relationships. The longer customers stay, the more opportunities the company has to offer additional financial products. Checking accounts become credit cards. Credit cards become personal loans. Loans become investments. Insurance follows. Business banking eventually enters the picture. Every additional service strengthens customer loyalty while increasing lifetime value. Another encouraging sign comes from operational efficiency. New improved its efficiency ratio from 21.4% down to 17.6%. Lower efficiency ratios generally indicate a business is becoming more productive while controlling costs. As companies scale, maintaining operational discipline becomes increasingly important. Growing revenue is impressive. growing revenue while becoming more efficient is even better. One of the biggest milestones during the quarter involved Mexico management announced that its Mexican operation reached break even while serving approximately 15 million customers. That's an important development because it demonstrates new can successfully replicate its business model outside Brazil. International expansion always carries uncertainty. Every country has different regulations, consumer behaviors, and competitive landscapes. Seeing Mexico reach profitability gives investors additional confidence that the company's expansion strategy may continue working in other markets over time. Management also shared an interesting long-term projection. They believe digital challenger banks could eventually capture 35% of the global banking revenue pool which they estimate at roughly 15 trillion to 17 trillion by the end of the decade. Now whether that exact forecast proves accurate is impossible to know. But the broader trend is difficult to ignore. Consumers increasingly expect banking to be simple, mobile, and available instantly. Traditional institutions built decades ago often struggle to deliver that kind of experience because they're still operating on older infrastructure. Companies that started as digital first businesses have a natural advantage in adapting to modern customer expectations. Another long-term catalyst investors should pay attention to is news planned expansion into the United States. Management believes entering the US creates another significant growth opportunity over the coming years. Now, I don't expect that expansion to transform the business overnight. The American banking market is extremely competitive. Winning customers won't be easy, but the opportunity itself adds another layer of optionality. Whenever I evaluate growth companies, I like businesses that have multiple future growth drivers rather than depending on one single market. New already has meaningful opportunities across Latin America. Adding potential exposure to the US market increases the number of ways the company could continue growing over the next decade. Valuation is another area where NU becomes particularly interesting. Despite its rapid expansion, the stock currently trades at a forward price to earnings ratio around 19. Its PEG ratio sits near 0.81, suggesting investors are paying relatively little for the company's projected growth compared to many other high- growth businesses. Analysts currently maintain a consensus price target around $17.91 with the majority continuing to rate the stock as either a buy or strong buy. Of course, analyst ratings should never replace independent research, but they do provide another indication that many professionals continue seeing meaningful upside from current levels. Now, let's discuss the risks because every investment opportunity comes with trade-offs. Although revenue grew nearly 58%, new still narrowly missed analyst expectations by approximately 1.8%. Missing expectations by itself isn't necessarily alarming, but investors have become accustomed to exceptional execution from new. Whenever expectations become extremely high, even small disappointments can pressure the stock. Another area worth watching involves credit quality. The company's credit loss allowance increased 72% year-over-year, reaching approximately $1.79 billion. That doesn't automatically mean loan performance is deteriorating dramatically, but it does indicate management is preparing for potentially higher future credit losses. Risk adjusted net interest margin also declined from 10.5% to 9.5%. While still healthy, investors should monitor whether that trend stabilizes over future quarters. Another challenge is currency volatility. Since new operates across several Latin American countries, fluctuations in the Brazilian real, Mexican peso, and Colombian peso can significantly affect reported financial results. Even when the underlying business performs well operationally, foreign exchange movements may create volatility in reported earnings. That's simply part of investing in international businesses. Personally, I don't see currency fluctuations as a reason to avoid a great company. There's something investors should understand and expect. Over long periods, strong businesses often overcome temporary currency headwinds through continued operational execution. Stepping back, I think what makes new particularly compelling is that it combines three characteristics investors rarely find together. Rapid customer growth, strong profitability, reasonable valuation. Usually companies growing this quickly trade at enormous multiples. New doesn't. Usually companies generating this level of profitability have already matured. New hasn't. That combination creates an interesting setup. Could the stock remain volatile? Absolutely. Could macroeconomic conditions across Latin America temporarily pressure results? Certainly. Could credit costs fluctuate? Without question. But if management continues executing while expanding financial inclusion across multiple countries, today's valuation could prove quite attractive several years from now. One thing I've learned over the years is that investors often underestimate businesses solving enormous structural problems. Financial inclusion isn't a short-term trend. It's a multi-deade opportunity. As more consumers gain access to digital financial services, companies already positioned at the center of that transformation stand to benefit. New appears to be building exactly that kind of platform, and that's why I believe it deserves a place on this list of compelling stocks trading under $50. This video is brought to you by Value Stocks Investing Master Course. If you're looking to grow your wealth by investing in solid, undervalued stocks, but not sure where to start, I created the Value Stocks Investing Master Course to teach you how to identify great companies, make smart investment decisions, and build a portfolio that lasts. Click the link in the description and pinned comments to get the course today, and take control of your financial future. Now, before we wrap up, let's quickly compare all the two companies. Sofi Technologies offers a compelling digital banking story built around ecosystem expansion, cross-selling, and steadily improving profitability. New Holdings represents one of the fastest growing digital banking platforms in the world with enormous opportunities driven by financial inclusion and international expansion. Each investment thesis is different. SoFi is a scaling digital financial platform. NEW is a global consumer finance compounder. What the two companies have in common is that they currently trade well below $50 per share while operating in industries with meaningful long-term growth potential. None of them are risk-f free. Execution matters. Competition will remain intense. Macroeconomic conditions could affect results, but that's often why attractive opportunities exist in the first place. If every uncertainty disappeared tomorrow, these stocks would probably trade at much higher valuations. Sometimes investing isn't about finding perfect businesses. It's about finding great businesses before everyone else fully appreciates their long-term potential. If you want exclusive stock tips, in-depth analysis, realtime trade alerts, and free investing guides, join the Stocks Galore Patreon today and take your investing game to the next level. Our members get full in-depth analysis on most of the stocks mentioned here. Head over to patreon.com/stocksgalore and become part of our growing community of smart investors. Link is in the description. Now, I'd like to hear from you. Which of the two companies do you believe has the strongest long-term competitive advantage over the next decade, SoFi or New Holdings? And why? Let me know your thoughts in the comments below because I'd love to hear your investment thesis. Do not forget to like the video, share your thoughts in the comments, and subscribe so you do not miss the next important investing update. 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