History Says the Nasdaq Will Soar in 2026. 1 Stock-Split Stock to Buy Before It Does

The technology-heavy Nasdaq Composite index looks all set to soar in 2026. This rally, if it comes to pass, will be primarily driven by the increasing adoption of artificial intelligence (AI) across the world. In this AI-powered expansion cycle, accelerating automation and data center investments have become the key growth catalysts for Wall Street.

Gartner estimates that global AI spending will be nearly $1.5 trillion by 2025 and over $2 trillion in 2026. The massive capital expenditure cycle is expected to lift share prices of several technology companies tied to semiconductors, cloud platforms, and automation software. Hence, we may also witness significant gains in the Nasdaq Composite index.

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History also supports this viewpoint. Since 1942, bull markets in the U.S. (measured with the benchmark S&P 500 index performance) have typically lasted about 4.3 years, and generated an average cumulative total return of 149.5%. Since the current rally began in October 2022 and the index has earned almost 117.5% in the past three years, there still appears to be ample room for the market to advance before reaching maturity.

Investors are also demonstrating strong optimism for the equity market. The AAII Investor Sentiment Survey showed bullish sentiment near 45.8% in early October 2025, above its long-term average of 37.6%. In such an environment, investors are looking out for new growth stories. Stocks that have been split can be strong picks for investors, as they highlight the management's confidence in the company.

One such stock is Interactive Brokers (NASDAQ: IBKR), which completed a 4-for-1 forward stock split, effective June 17. Shares of the company are already up by 56% so far in 2025. Despite these stellar gains, here's why Interactive Brokers can still deliver an exceptional 2026.

Growth catalysts

Interactive Brokers has evolved into a highly efficient and automated global electronic broker with operations in the U.S. and international markets across over 160 electronic exchanges. The company has automated the majority of broker-dealer functions and is leveraging artificial intelligence to build a broad, low-cost global trading platform.

Interactive Brokers is witnessing a surge in investors seeking access to U.S. and international markets during overnight trading hours. To meet this demand, the company's platform provides around-the-clock trading access to over 10,000 U.S. stocks and ETFs, U.S. equity index futures and options, as well as global corporate bonds, U.S. Treasuries, and European and UK government bonds.

Since many overseas clients can trade U.S. markets during their own daytime hours, overnight trading volumes were up by 170% year over year in the second quarter.

Interactive Brokers' technology-driven execution is also proving to be a competitive edge. The company's automated trading system (ATS) can handle 20 times regular volume spikes. The company has also enhanced its smart order router to further improve trade execution by ensuring better price capture and incorporating the potential of exchange rebates. These efficiencies matter for active, price-sensitive traders.

These improvements have helped the company rapidly expand its client base. Interactive Brokers added 250,000 net new accounts, while client credit balances soared 34% year over year to a record $144 billion at the end of the second quarter.

The customer acquisition pace can continue to grow in 2026 as the company has also introduced several new tools. The recently launched Investment Themes market discovery tool helps investors quickly act on market trends. Another tool called ForecastEx enables customers to trade simple "Yes" and "No" event-based contracts for assets such as indices, forex, and cryptocurrency.

Valuation

Interactive Brokers saw revenue jump 14.7% year over year to $1.48 billion in the second quarter. The company's adjusted earnings per share (EPS) also grew by over 21% to $0.51. Analysts expect the company's revenue to be up 12.3% to $5.9 billion and non-GAAP EPS to grow 16.4% year over year to $2.05 in fiscal 2025. The recent stock split has further improved accessibility for retail and institutional investors.

Interactive Brokers trades at 31 times forward earnings, which seems expensive for an electronic brokerage business. However, the valuation is justified considering the company's focus on automating all possible functions, new market discovery tools, and rapidly expanding global account openings. The company is also benefiting from rising global participation in options and futures. Hence, this stock is well-positioned to prove to be a smart pick in 2026.

Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Interactive Brokers Group. The Motley Fool recommends the following options: long January 2027 $43.75 calls on Interactive Brokers Group and short January 2027 $46.25 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.