Nasdaq’s SWOT analysis: exchange giant faces volatility, growth challenges

Nasdaq, Inc. (NASDAQ:NDAQ), a leading global provider of trading, clearing, exchange technology, listing, information, and public company services, has been navigating a complex market environment characterized by increased volatility and regulatory uncertainties. The company’s stock has demonstrated remarkable strength, gaining nearly 44% over the past year and currently trading near its 52-week high of $95.55. As the company approaches the end of fiscal year 2025, analysts are closely monitoring its performance and future prospects, with 15 analysts recently revising their earnings expectations upward for the upcoming period.

Business Overview and Recent Performance

Nasdaq operates as a diversified financial services company, offering a range of products and services across its various segments. The company’s recent performance has shown resilience in the face of market challenges. In the second quarter of 2025, Nasdaq reported earnings per share (EPS) of $0.85, surpassing consensus estimates by approximately 5%. This outperformance was attributed to better-than-expected total revenues and improved margins across its three main business segments.

The company’s solid progress in its business segments has led some analysts to maintain a positive outlook for the second half of 2025 and into 2026. Despite unchanged guidance, the strong performance across Nasdaq’s divisions suggests potential for future growth, supported by impressive revenue growth of 23.51% over the last twelve months.

Want to dive deeper into NDAQ’s performance metrics? InvestingPro offers comprehensive analysis with 12+ additional exclusive insights and real-time financial metrics to help you make informed investment decisions.

Market Trends and Outlook

The financial markets have experienced significant volatility in recent months, which has had both positive and negative implications for Nasdaq. On one hand, increased market volatility typically leads to higher equity and derivative trading volumes, benefiting the company’s Market Services segment. This trend was evident at the start of 2025, with record option volumes reported in January.

However, the company also faces challenges related to potential regulatory changes. The Trump administration’s consideration of delisting Chinese companies from U.S. stock exchanges has raised concerns about the impact on Nasdaq’s listing revenue. While the estimated annual listing revenue from Chinese companies represents only about 2% of Nasdaq’s projected 2025 data and listing revenue, the move could create an incremental headwind for the company.

Segment Analysis

Nasdaq’s business is divided into several key segments, each facing its own set of opportunities and challenges:

1. Market Services: This segment is expected to benefit from increased market volatility, which typically drives higher trading volumes in both equity and derivative markets.

2. FinTech: There are concerns about a potential slowdown in Annual Recurring Revenue (ARR) for Nasdaq’s financial technology offerings, including its Calypso platform. Some analysts have noted elongated sales cycles in this sector, which could impact growth projections.

3. Index and Data Services: The company’s index business may face pressure due to market downturns and potential outflows from index-linked products. However, the long-term trend towards passive investing could provide support for this segment.

Financial Metrics and Projections

Analysts have provided various projections for Nasdaq’s financial performance:

• EPS forecasts for fiscal year 2025 (FY1) range from $3.11 to $3.36
• EPS estimates for fiscal year 2026 (FY2) are between $3.49 and $3.75

These projections reflect expectations of continued growth, albeit with some variations among analysts. The company’s ability to meet or exceed these estimates will likely depend on its success in navigating market volatility and capitalizing on growth opportunities across its business segments.

Competitive Landscape

Nasdaq operates in a highly competitive environment, facing competition from other major exchanges such as the New York Stock Exchange (NYSE), CME Group Inc. (NASDAQ:CME), and Cboe Global Markets Inc. (NYSE:CBOE). The company has shown strong momentum with a 17.94% price return over the past six months and a year-to-date return of 23.86%. While some analysts note that the company is well-positioned for continued growth due to intact secular trends, current valuation metrics from InvestingPro suggest investors should carefully consider entry points.

Bear Case

How might the potential delisting of Chinese companies impact Nasdaq’s revenue?

The potential delisting of Chinese companies from U.S. stock exchanges poses a risk to Nasdaq’s listing revenue. While the direct financial impact is estimated to be relatively small—around $15 million annually or 2% of projected 2025 data and listing revenue—the move could have broader implications. It may create uncertainty in the market and potentially deter other foreign companies from listing on U.S. exchanges. Additionally, this development could exacerbate existing pressures on Nasdaq’s business, such as challenges in the FinTech sector and index performance concerns.

What challenges does Nasdaq face in its FinTech segment?

Nasdaq’s FinTech segment, which includes offerings like the Calypso platform, is facing headwinds related to elongated sales cycles and potential slowdowns in Annual Recurring Revenue (ARR). These challenges may be attributed to broader economic uncertainties and cautious spending by financial institutions. If persistent, these issues could impact Nasdaq’s growth projections and overall financial performance. The company will need to navigate these challenges carefully and potentially adapt its strategies to maintain growth in this important segment.

Bull Case

How could increased market volatility benefit Nasdaq’s performance?

Increased market volatility presents a significant opportunity for Nasdaq, particularly in its Market Services segment. Higher volatility typically leads to increased trading volumes in both equity and derivative markets, which can boost transaction-based revenues. The strong start to 2025, with record option volumes reported in January, demonstrates this potential. If market volatility remains elevated, Nasdaq could see sustained growth in trading activity, potentially leading to upward revisions in earnings estimates and improved financial performance across its trading-related businesses.

What growth opportunities exist for Nasdaq in the current market environment?

Despite challenges, Nasdaq has several growth opportunities in the current market environment. The company’s diverse business model allows it to capitalize on various market trends. For instance, the ongoing shift towards passive investing could benefit Nasdaq’s index business in the long term. Additionally, regulatory changes and market structure evolution may create opportunities for Nasdaq to innovate and expand its service offerings. The company’s strong position in technology and data services also provides avenues for growth as financial institutions increasingly rely on advanced analytics and market intelligence.

SWOT Analysis

Strengths:

• Diverse business model spanning trading, technology, and data services
• Strong market position and brand recognition
• Robust technology infrastructure

Weaknesses:

• Exposure to market volatility and cyclical trends
• Potential slowdown in FinTech segment growth
• Dependence on U.S. equity market performance

Opportunities:

• Increased trading volumes due to market volatility
• Expansion of data and analytics offerings
• Potential for innovation in market structure and technology

Threats:

• Regulatory changes, including potential delisting of Chinese companies
• Intense competition from other exchanges and financial service providers
• Macroeconomic uncertainties affecting capital markets

Analysts Targets

• Barclays (LON:BARC): $109.00 (July 25th, 2025)
• Barclays: $84.00 (June 13th, 2025)
• RBC Capital Markets: $95.00 (April 10th, 2025)
• Piper Sandler: $80.00 (February 3rd, 2025)
• Deutsche Bank (ETR:DBKGn): $98.00 (January 8th, 2025)

This analysis is based on information available up to July 28, 2025, and reflects the views and projections of various financial analysts and institutions regarding Nasdaq, Inc.’s performance and outlook.

InvestingPro: Smarter Decisions, Better Returns

Gain an edge in your investment decisions with InvestingPro’s in-depth analysis and exclusive insights on NDAQ. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore NDAQ’s full potential at InvestingPro.

Should you invest in NDAQ right now? Consider this first:

Investing.com’s ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if NDAQ is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level.

To evaluate NDAQ further, use InvestingPro’s Fair Value tool for a comprehensive valuation based on various factors. You can also see if NDAQ appears on our undervalued or overvalued stock lists.

These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.