Nasdaq’s Business Is Outrunning Its Stock
When SpaceX (NASDAQ: SPCX) went public this summer, it did more than make history as the largest IPO ever. It handed Nasdaq (NASDAQ: NDAQ) a trophy moment.
In fact, on a share volume and transaction count basis, this has been a banner year. Yet Nasdaq, the stock, has been strangely unloved.
That gap between a business firing on all cylinders and a stock stuck in neutral is the story investors need to understand. With a third-quarter report and a major trading launch both on the calendar, the next few months could decide which way it breaks.
Strong Results Highlight Nasdaq’s Momentum
Net income through the year has been strong, and Nasdaq's second-quarter report on July 23 was about as clean as they come.
Total revenue climbed 20.5% to $2.53 billion, soaring past analyst projections of $1.46 billion. Net revenue jumped 15% to $1.5 billion, and growth was in the double digits across all three of its divisions. Reported net income rose 12% to $507 million, or 89 cents per share.
Adjusted profits grew faster still. Adjusted earnings per share climbed 25% to $1.07, comfortably ahead of the 98-cent consensus. Adjusted operating margin widened to 57% from 55% a year earlier, a level of profitability often reserved for software companies.
Growth Extends Across Nasdaq’s Businesses
The momentum was broad as both trading and listing on the markets were vibrant. Revenue from the index business, which earns fees when funds track benchmarks like the Nasdaq-100, surged 38%.
Assets in exchange-traded products tied to Nasdaq indexes topped $1 trillion for the first time, helped by a record $51 billion of inflows in the quarter. Financial technology revenue rose 16%, and annualized recurring revenue reached $3.3 billion, up 11%.
Recurring Revenue Reshapes the Business
Nasdaq is no longer just a trading venue whose fortunes rise and fall with market volume.
Most of its revenue now comes from what Nasdaq calls Solutions revenue, which is recurring and generally steadier than trading fees. That includes data, index licensing, listings, and software, which grew 17% to $1.16 billion last quarter.
The company is also pushing hard into what it calls always-on markets. Beyond the upcoming Dec. 6 launch of trading 23 hours a day, five days a week, it agreed on Aug. 11 to buy LeveL Markets, one of the largest off-exchange equity trading venues in the United States.
On Sept. 10, Nasdaq Ventures also agreed to invest $100 million in Payward, the parent of crypto exchange Kraken, to develop tokenized versions of stocks.
Nasdaq Shares Lag Behind the Business
Despite the initiatives, Nasdaq shares have taken a wild ride this year, fluctuating from a high of $101.78 in January to a low of $76.55 in June. Buffeted by its own portfolio restructuring, IPO expectations, institutional repositioning, the company is treated as a tech company itself rather than an old-fashioned quotation service.
The shares have told the story. Nasdaq stock is down 5% from the start of the year and up only slightly more than 4% over the past 12 months.
Analysts See Upside Ahead
Analysts, however, remain positive. The 13 analysts following the stock rate the shares a consensus Moderate Buy, with one Strong Buy, nine Buy ratings and three Holds.
The 12-month consensus price target for the shares is $109.25, implying a roughly 18% upside, with the highest target price of $120 and the lowest $100.
For shareholders, the company is giving back. Nasdaq repurchased $903 million of stock in the first half of 2026, already more than the $616 million it repurchased in all of 2025. And in April, it raised its quarterly dividend to 31 cents from 27 cents, its 14th straight year of increases, for a yield of about 1.3%.
Risks Could Temper the Momentum
There remain reasons for caution, though. The biggest risk is that the second quarter may have been as good as it gets for a while. A once-in-a-generation IPO, record trading volumes and booming index inflows are, by definition, hard to repeat.
Nasdaq's index and trading revenue depend heavily on rising markets and active investors. If stocks slide, assets tracking its indexes shrink, IPOs dry up, and those high-margin fees fall with them.
Costs are also creeping up. Management raised its 2026 adjusted expense guidance to $2.53 billion to $2.57 billion from $2.485 billion to $2.545 billion, citing higher employee compensation and IPO marketing.
Its Verafin anti-fraud software is also winning customers more slowly outside the United States, where CEO Adena Friedman said sales cycles were slow.
Competition is heating up as well. Intercontinental Exchange's (NYSE: ICE) New York Stock Exchange is racing to offer round-the-clock and tokenized trading, and crypto platforms such as Coinbase Global (NASDAQ: COIN) are promoting their own tokenized stocks.
The Business and Stock Could Reconnect
For investors equating Nasdaq the company and Nasdaq the index, it’s important to recognize the substantive difference. The Nasdaq business offers the steady recurring revenue of a software company and the upside of a market operator during boom times. It also swings independent of any valuations in its market.
These days, investors seem more focused on what could go wrong at the company than on how well the business is executing. Third-quarter earnings will be out by the end of October. If listings and index inflows stay strong, expense growth is tamed, and 23-hour trading looks ready to launch, the gap between the stock and its business might finally close.
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