Big banks are starting to flex again — and one analyst said their stocks are the best place for investors to be in the second half of 2025.
Following better-than-expected earnings from Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS), Argus Research director of financial services research Stephen Biggar said the environment now favors big players with exposure to capital markets.
“These big banks are actually gaining share,” Biggar said on Yahoo Finance’s Opening Bid. Major banks are showing strong investment banking results and positive loan growth, with average loans up 5% at JPMorgan (JPM) and 7% at Bank of America.
Year to date, stocks of Goldman Sachs and JPMorgan are up 22% and 19%, respectively, handily beating the S&P 500’s (^GSPC) 6% gain. Morgan Stanley and BoA are up 10% and 3%, respectively.
That’s a significant shift from earlier in the year, when many on Wall Street were bracing for sluggish growth and cautious outlooks tied to tariff-related turmoil. Bank executives had struck a more conservative tone, particularly around the pace of investment banking recovery, but the latest numbers reveal a more optimistic story.
Biggar argued that big banks are pulling ahead of regional players, largely because of their scale, diversification, and ability to benefit from improving capital markets activity.
“I think regionals are struggling a bit here,” Biggar said, adding that large firms are better positioned because they can grow more by increasing loans and expanding their service areas. For example, JPMorgan is adding 500 branches over the next few years and has a wider array of products for the average consumer, Biggar said.
There are also regulatory tailwinds that could develop under the Trump administration, including the prospect of lower capital requirements from the Federal Reserve, which could free up big banks to lend more aggressively. That would add to already strong momentum in key areas like credit cards and commercial lending.
Bigger added that the deck is currently stacked in favor of firms involved in equity and debt underwriting, advisory services, and trading. Goldman Sachs, for example, posted strong investment banking results in Q2, thanks in part to rising M&A activity and a pickup in debt underwriting. JPMorgan and Morgan Stanley also showed strength in these areas, suggesting that deal activity is coming back to life.
“There’s a long runway ahead,” he said. “We think there’s a lot of pent-up demand in investment banking, more M&A activity, and an easier regulatory environment, which could mean the big banks would be the prime beneficiaries.”
While the news on big banks is solid, “the great news is on investment banking, and that’s cyclical,” Commerce Street Holdings CEO Dory Wiley said on Yahoo Finance’s Market Catalysts.
Wiley pointed to Huntington Bancshares’ (HBAN) $1.9 billion acquisition of Veritex (VBTX) as a possible prelude to more regional bank consolidation across the US. “Investors are realizing this was priced in already,” he said, noting that while some deal optimism is returning, “there’s still a lot of pressure on the consumer.”
Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at francisco.velasquez@yahooinc.com.
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