Charles Schwab (SCHW) CEO Rick Wurster says his company’s stock deserves a higher valuation.
The investment services giant is aiming to close that gap by integrating AI into its tried and true wealth-building recipe while dodging the so-called “transactions business” race younger upstarts are running.
“We are in the outcomes business,” said Wurster, who spoke with Yahoo Finance from Schwab’s Westlake, Texas, headquarters. The brokerage isn’t planning to add meme coins, prediction markets, or an AI-powered cash sorter, he added.
In February, Schwab began facing investor concern that it might end up on the wrong side of the AI era. The stock drama ensued after a small competitor unveiled an AI model for tax planning. The market reaction walloped wealth management stocks. In a week, Schwab’s stock fell from a peak of $107 to $94. It’s down 16% from that high to $90.
“Some others are in the business of getting people to engage, come on the platform to bet and to do so frequently, in ways that may not be benefiting their overall wealth. That’s how they make money,” said Wurster.
Schwab can dodge the transaction business as it draws a far slimmer portion of revenue from trading versus younger competitors. “I would think it’s hard to sustain that level of activity over time … if your mission is to make people better off, to call gambling an asset class alongside equities, bonds, commodities, I think, is incredibly misleading and disingenuous.”
The 53-year-old CEO, who’s a year and a half into his role, prefers compounding returns like Warren Buffett over meme stock mania like Roaring Kitty. But his company is no longer the one Charles Schwab launched over 50 years ago as an upstart challenger to big Wall Street brokers.
Instead, Schwab is currently the country’s largest publicly traded brokerage, managing $12.6 trillion in client assets for over 47 million customer accounts. It’s now battling against today’s upstart fintechs along with other major banks in a new era of deregulation and AI advances.
At Schwab’s investor day earlier this month, Wurster and team laid out big growth plans, lifting its 2026 revenue forecast by 4.5% to a range of $27.3 to $27.5 billion, compared to $24 billion in 2025.
Along with a deeper push into lending, wealth advisory, and workplace offerings, Wurster sees AI as a major enabler to that growth. Schwab has an AI model coming later this year that will become the “front door” for customers and possibly its advisers.
In a demo at investor day, the Chat-GPT-like model gave portfolio-tailored market updates as specific as ‘what does the new Fed chair mean for my portfolio?’ and ‘I also have company equity, are those affected?’
The model is supposed to boost Schwab’s efficiency at reaching customers, particularly for younger investors seeking financial education content.
Grabbing more of the younger cohort’s attenion is of real importance for Schwab. Like many major firms, the brokerage faces a demographic transition that could be significant a decade from now, according to Argus Research analyst Stephan Biggar.
“They acquired a ton of clients some 20 years ago, and they’ve all aged and will be one year older a year from now,” said Biggar, who has covered Schwab for over a decade.
Schwab has made strides in that arena but it still has more work to do. The average age of its new-to-firm customers is 39, while the average age of Schwab’s retail client base is 49, according to Schwab. Last year, a third of the financial plans Schwab made were for Gen Z investors.
Young investors “want to work with a firm that stands for building their clients’ wealth, not trying to get them to transact or gamble,” Wurster argued.
The concern among analysts covering Schwab more recently is whether advancing AI cash optimization tools could cause customers to pull out idle cash from their accounts. The firm has a massive pool of idle cash balances, which it lends out to gain interest revenue.
“The market is overestimating the impact that it could have on our business,” Wurster told Yahoo Finance, arguing that Schwab’s customers already optimize their cash and it offers other higher-yield products.
David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on X at @DsHollers.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
