Nu vs. SoFi: Which Digital Banking Stock Is the Better Investment Now?

Nu Holdings Ltd. NU and SoFi Technologies, Inc. SOFI are often grouped as digital banking disruptors. Both operate digital-first financial platforms offering banking, lending and other financial services, with Nu focused on Latin America and SoFi primarily serving the U.S. market.

Specifically, Nu is the larger customer platform, with deep roots in Brazil and expanding banking operations in Mexico and Colombia. SoFi is smaller by membership, yet it combines a U.S. digital bank, lending engine, investment platform and financial technology business under one brand.

Nu offers scale, strong engagement and low operating costs, but it also carries heavier exposure to unsecured consumer credit and Latin American economic swings. SoFi faces its own risks, especially from lending concentration and execution across many new products, though its revenue mix is becoming broader.

The key question is not which company is growing faster in one quarter. It is which model offers the better balance of growth, credit quality, diversification and risk. Looking at those points side by side gives investors a clearer way to judge both stocks.

The Case for NU

Nu's scale is impressive, but scale alone does not remove risk. The company has more than 135 million customers, with more than 115 million in Brazil and 15 million in Mexico. That reach supports strong revenue growth, yet it also makes Nu increasingly tied to consumer conditions in a few Latin American markets.

The main concern is credit mix. Nu's total exposure rose sharply, while 98% of new exposure came from credit cards and unsecured loans. Those products earn high yields, but they also require larger upfront provisions and can weaken quickly when household finances come under pressure. SoFi also relies on personal lending, but its borrowers generally sit in a different income and credit profile.

Nu's first-quarter risk-adjusted net interest margin fell to 9.5% from 10.5%. Management said seasonality, growth and mix drove the move rather than broad credit deterioration. However, faster expansion can create noisier provisions and less predictable earnings.

International growth adds another layer of uncertainty. Mexico is now profitable and will operate as a bank, while Brazil's new license supports its existing structure. Still, building deeper banking operations requires regulatory work, deposits, underwriting discipline and local execution.

Nu is also spending on artificial intelligence and a measured U.S. expansion. Those efforts may help over time, but they raise the number of moving parts. Compared with SoFi's more mature U.S. regulatory base, Nu's geographic concentration and unsecured credit exposure leave less room for error at this point.

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The Case for SOFI

SoFi has a broader product mix. The company now serves 15.8 million members across banking, lending, investing, credit cards, insurance referrals and technology services. The base is far smaller than Nu's, but SoFi is showing that members are adding more products, which can lower acquisition costs and deepen relationships.

The solid evidence is cross-buying. In the latest quarter, 51% of new products were opened by existing members, up from 35% a year earlier. SoFi Plus, SoFi Coach, investing tools, small-business loans and business banking are designed to keep more activity inside one platform. Nu is also expanding beyond basic banking, but SoFi currently offers a wider U.S. product set.

Lending remains central, so the story is not risk-free. Personal loans produced most lending volume, and balance sheet growth helped support revenues. Still, SoFi reported improving personal-loan charge-offs, a 40-basis-point 90-day delinquency rate and a total capital ratio of 18.8%, well above the regulatory minimum.

Revenue quality is also improving. Fee-based revenues reached 39% of quarterly revenues, while Financial Services and Technology Platform revenues together represented 46% of adjusted net revenues. The technology segment has not grown smoothly, but loan-platform partnerships, brokerage fees, interchange and subscriptions reduce dependence on net interest income.

Compared with Nu, SoFi lacks the same customer scale and faces intense U.S. competition. Yet, its deposit base, capital position, improving cross-buy and expanding fee streams create a more balanced setup. The outlook is promising, though execution across many launches still deserves close attention.

How Do Estimates Compare for NU & SOFI?

The Zacks Consensus Estimate for Nu's 2026 and 2027 sales implies year-over-year growth of 42.13% and 24.33%, respectively. The consensus mark for 2026 and 2027 EPS suggests a year-over-year increase of 33.87% and 38.07%, respectively. Over the past 60 days, estimates for Nu's 2026 EPS has been revised southward, while that for 2027 has remained unchanged.

For Nu Holdings: Zacks Investment Research

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The Zacks Consensus Estimate for SoFi Technologies' 2026 and 2027 sales calls for year-over-year growth of 35.55% and 17.05%, respectively. The consensus estimates for both 2026 and 2027 EPS have been revised marginally upward over the past 60 days. The figures suggest a year-over-year increase of 53.85% and 34.45%, respectively.

For SoFi Technologies:Zacks Investment Research

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Price Performance and Valuation of NU & SOFI

So far in the year, Nu shares have declined 13.4%, while SoFi Technologies shares have plunged 37.1%. In comparison, the S&P 500 composite has advanced 8.2% in the same time frame. Zacks Investment Research

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NU is trading at a forward 12-month price-to-earnings of 14.24X, which is below its one-year median of 18.82X.

Meanwhile, SOFI is presently trading at a forward 12-month price-to-earnings of 23.17X, which is well below its one-year median of 40.06X.

However, the lower multiple does not automatically make Nu a safer option. Its earnings depend on Latin American credit conditions, unsecured lending, and execution in Brazil and Mexico. SoFi's higher multiple requires member growth, cross-buying and margin expansion.Zacks Investment Research

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Conclusion

Nu remains a digital banking operator, but its risk profile looks less comfortable now. Heavy exposure to unsecured consumer credit, concentration in Latin America and added spending on expansion could make results more uneven, even with robust scale and efficiency.

SoFi is not a low-risk choice. Its lending business, product launches and technology platform require careful execution. Yet, the company has a broader revenue mix, growing fee income, strong capital and better evidence that members are using multiple services. For investors choosing between the two, SoFi is in a position to be kept, while Nu is the clearer one to exit.

While SOFI carries a Zacks Rank #3 (Hold), NU has a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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