Giverny Capital Sees Schwab's Earnings Momentum Stretching Into 2026
In its recently released fourth-quarter 2025 letter to investors, Giverny Capital Asset Management outlined a year of contrasting fortunes. While the firm's portfolio eked out a 0.01% return for the quarter against the S&P 500's 2.66% gain, its full-year performance of 12.58% trailed the index's 17.88%. The letter pointed to a market narrowly driven by mega-cap technology and AI euphoria as a headwind for its strategy, which favors smaller, niche leaders with strong fundamentals.
Amid this backdrop, one holding stood out for its consistent performance: The Charles Schwab Corporation (NYSE: SCHW). The brokerage and financial services behemoth was cited as a leading contributor. Schwab's shares closed at $103.92 on January 30, 2026, boasting a market cap nearing $189 billion and delivering a 25.58% return over the preceding twelve months.
Giverny's analysis suggests Schwab's runway for earnings growth remains clear into 2026. The firm's commentary, however, came with a notable caveat. While acknowledging Schwab's solid potential, the letter indicated a strategic preference for select AI stocks perceived to have "greater upside potential and carry less downside risk." This reflects a broader tension in current markets between established financial stalwarts and high-growth tech narratives.
Analyst & Investor Reactions:
"Giverny's note reinforces what we're seeing in the data—Schwab is executing flawlessly in a complex rate environment," says Michael Thorne, a financial sector analyst at Brighton Research. "Their scale and client asset growth are translating directly to the bottom line. The 2026 momentum story is credible."
Retail investor Sarah Chen expressed a more measured view: "It's a bedrock company, and it's performing. But in this market, 'steady' sometimes feels like you're missing out on the bigger waves elsewhere. I'm holding, but not adding."
Conversely, portfolio manager David R. Feldstein was sharply critical of the market's dichotomy: "This is peak irrationality. We're dismissing a cash-generating fortress like Schwab with century-long durability to chase AI pixie dust from companies that might not exist in a decade. Giverny's own letter laments the tech distortion, yet still hints that AI stocks are 'better'? It's a contradictory and dangerous mindset infecting professional and retail investors alike."
The letter also noted that Schwab did not rank among the top 30 most popular hedge fund stocks, with 99 funds holding it at the end of Q3 2025, down from 100 the prior quarter.
Disclosure: This analysis is based on public investor communications and is for informational purposes only. It is not investment advice.