Charles Schwab

Charles Schwab runs a large brokerage, banking, and wealth management business. Clients hold cash and investments at Schwab. Schwab earns net interest revenue on client cash that it holds on its own balance sheet. It invests this cash in securities and lends it as margin loans and bank loans.

Schwab sweeps more client cash to TD Bank under an insured deposit account agreement and earns a fee on these deposits. Schwab also earns asset-based fees on managed portfolios, mutual funds, and advisory accounts, plus trading revenue. In 2025, net interest revenue was about half of total net revenues.

Schwab still trades as if client cash could sort back into money market funds and other higher-yielding places. That is the fear that hit the whole brokerage industry in 2023. That fear has kept fading. Net interest margin rose from 2.86% in the third quarter of 2025 to 3.00% in the second quarter of 2026, and core net new assets keep growing faster than the year before.

A new worry took its place in September 2026. Schwab stock fell about 6% in one day on fear that AI assistants built into rival apps, such as Meta's new Muse, could weaken the loyalty that keeps clients on one brokerage's platform. For the first fear to keep fading, Schwab needs net interest margin and net new asset growth to keep showing up in its results. The next test is the third quarter report and the fall business update on October 15, 2026.

For the AI-loyalty fear to fade, Schwab needs to show that its own AI tools keep clients and advisors on its platform. These tools include Charley, its assistant for retail clients, and a partnership that brings Claude to more than 16,000 independent advisor firms. The Federal Reserve raised rates in September 2026, and its officials expect one more increase this year. Higher rates help the yield on Schwab's assets, but they also make money market funds more attractive than sweep cash.

If both trends keep confirming in the next two to three quarters of earnings, the market's caution looks overdone and the gap can close. If deposit competition or client movement to AI-native tools shows up instead, the discount could persist into 2027.

1. Oct 15, 2026Pending

   Q3 2026 results and fall business update: margin, new assets, client cashNet interest margin at or above the Q2 level of 3.00% and more core net new assets than a year earlier pass; a lower margin or client cash leaving sweep accounts fails.
2. Q4 2026 · est.Due this quarter

   Charley AI assistant rollout and advisor AI toolsClient asset and account growth that holds up while Charley and the Claude advisor tools roll out pass; slower net new assets or account closures linked to outside AI apps fail.
3. Jan 2027 · est.Pending

   Q4 2026 results and 2027 outlookA 2027 outlook with higher net interest revenue and the adjusted Tier 1 leverage ratio near 7% while buybacks continue passes; a lower margin outlook or a pause in buybacks fails.

Every passed and failed checkpoint across all picks

Schwab is a savings and loan holding company. Client money, not borrowed money, funds most of its $517.3 billion balance sheet. Read more

• Schwab holds a large fixed-income investment portfolio, built up when deposits were high. If the Federal Reserve cuts interest rates faster than expected, yields on this portfolio reprice down before deposit costs fall as much, which can compress net interest margin. The Fed raised rates 0.25 points in September 2026, and the median projection of its officials keeps rates near that level through 2027. A change in this outlook can bring the risk back.
• A large share of client cash sits in low-yielding bank sweep accounts. If money market fund yields pull further ahead of sweep rates, clients can move cash out of sweep and into higher-yielding funds. This lowers the low-cost deposit base Schwab lends against. Higher Fed rates make this gap larger.
• Schwab now competes directly with other platforms on commission-free trading, crypto trading, and cash yields. Its own crypto trading service only launched in 2026, so it is unproven against established crypto-focused competitors.
• AI assistants built into other companies' apps, such as Meta's Muse, could reduce the friction that keeps clients using a single brokerage's app and tools. The market sold Schwab stock on this fear in September 2026, even with no confirmed change to Schwab's own client or asset numbers.

• October 7, 2026Schwab common stock started to trade on the Texas Stock Exchange as a second listing. The New York Stock Exchange stays its primary listing.
• September 30, 2026Schwab announced Charley, a generative AI assistant for retail clients. It will roll out in phases on Schwab.com and Schwab Mobile, starting in October 2026.
• September 22, 2026Schwab stock fell about 6% in one day. The market reacted to Meta's new Muse AI assistant app, which reached the top of the US App Store within two weeks of launch, on fear that AI assistants could weaken the customer loyalty that brokerage and wealth firms depend on.