Bank of America stock (BAC) has surged more than 46% in the past year, matching the performance of its industry peers, all benefiting from favorable conditions in the banking sector. Despite the significant rally, the stock appears set for even greater heights. The banking giant’s Q4 results beat Wall Street expectations on both revenue and earnings, powered by record-setting net interest income (NII), strong investment banking performance, and rising consumer spending.
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Based on its momentum, I believe that BAC stock is set to not only reclaim its 2021 highs but also challenge levels not seen since the Great Financial Crisis. Accordingly, I am bullish on BAC stock.
Outstanding Q4 Results Bolster Wall Street’s Confidence
Wall Street’s confidence in BAC stock has strengthened notably in recent quarters, with Q4 marking the third straight quarter of EPS beats and the fourth consecutive quarter of revenue beats. The banking giant reported Q4 revenues of $25.3 billion, a 15% year-over-year increase that beat estimates by $170 million, and EPS of $0.83, up 134% year-over-year and beating expectations by $0.05. This performance was powered by several key factors, including rising NII, growing trading revenues, and excellent investment banking results—themes common in the industry lately due to favorable conditions.
In particular, NII climbed to $14.4 billion, up 3% year-over-year, driven by fixed-rate asset repricing, loan growth, and favorable deposit trends. Investment banking revenues surged by a much more impressive 44%, bolstered by a resurgence in M&A activity and strength in equity and debt capital markets. Further, sales and trading revenues achieved a noteworthy 10% year-over-year growth, with fixed-income trading benefitting from higher volatility and credit spreads.
On the consumer side, BAC added over 213,000 net new consumer checking accounts during the quarter, marking six consecutive years of quarterly growth. Spending trends remained robust too, with combined credit and debit card spending up 5% year-over-year, reaching $241 billion. Overall, these numbers clearly show BAC’s ability to capture market share across its diversified business lines, even if some investors often characterize it as a sluggish bank.
Favorable Banking Conditions Support BAC’s Momentum
Looking at 2025, BAC’s management has painted an optimistic picture, supporting the case for sustained momentum. Specifically, the company anticipates further growth in NII, projecting a 6%-7% increase over 2024 levels. Management’s confidence seems anchored in continued deposit growth, loan expansion, and repricing benefits from older fixed-rate assets.
The broader consumer banking environment also looks promising. As we know from the various agencies that periodically report on the subject, consumer spending in the U.S. remains healthy, supported by low unemployment and steady wage growth. Notably, on the commercial side, loan demand has been on an upward trajectory, with Q4 seeing $20 billion in loan growth due to increased optimism among corporate clients.
Attractive Valuation Could Push BAC to Record Highs
As mentioned in the introduction, I believe BAC stock has the potential to reclaim its 2021 highs and reach unseen levels since the Great Financial Crisis. For context, BAC stock peaked at $53.87, and with shares currently trading around $46.53 and appearing undervalued, a return to those highs 19 years later seems entirely plausible.
To explain why I view BAC as undervalued, consider the stock trading at 12.7x its anticipated earnings for the current financial year. I view this as a highly attractive multiple, given it stands on the back of 15% EPS growth for the year. In the meantime, Wall Street expects a further 18% growth in EPS in 2026 due to favorable market conditions and powerful operating leverage, meaning that investors should not lose faith in one of America’s most prominent banks, even in the short to medium-term.
Is Bank of America a Buy, Sell, or Hold?
Wall Street analysts remain quite optimistic following BAC’s Q4 report. The banking giant has gathered seventeen Buy and two Hold ratings over the past three months, resulting in a Strong Buy consensus rating. Moreover, BAC stock carries an average price target of $52.94, which implies almost 14% upside potential from current price levels of ~$46 per share.
If you can’t decide which analyst to favor when trading BAC stock, the most profitable analyst covering the stock (on a one-year timeframe) is Steven Chubak of Wolfe Research. He features an average return of 15.10% per rating and a 65% success rate.
BAC Momentum Signals Post-GFC Milestone
In summary, I believe that Bank of America is primely positioned to register further gains and for its uptrend to continue, as recent Q4 results showed tremendous internal strength across multiple key metrics. The company saw robust net interest income growth and strong investment banking performance, riding favorable consumer and commercial banking trends.
With management projecting further client growth and the stock trading at a relatively attractive valuation, BAC will likely reclaim its 2021 highs and potentially surpass pre-GFC levels. Moreover, the changing political landscape in the U.S., including the re-introduction of Donald Trump as U.S. President, seems favorable for large corporates like BAC. As such, I see the outlook for BAC as strongly bullish and recommend the stock, particularly for medium-long-term portfolios.
