Analysts, however, are focusing on the tailwinds they expect for the industry this year.

The US economy is expected to reaccelerate in 2026, with bankers also looking at the most regulatory leeway they've had since post-financial crisis reforms were passed in 2010. Lending growth is expected to rise, while lower rates should serve as another tailwind for the industry. Meanwhile, M&A momentum isn't expected to slow.

"The way 2025 unfolded, it was a story of increasing momentum throughout the year since the market paused in April and March," said Jay Hofmann, JPMorgan's head of M&A for North America. "At the moment, there is no reason to believe that the economic factors underpinning this are going to reverse."

JPMorgan Chase CEO Jamie Dimon speaks at the American Business Forum at the Kaseya Center in Miami on Nov. 6, 2025. (Chandan Khanna/AFP via Getty Images)

There's even growing debate that investors are beginning to value banking giants like technology companies, given potential productivity and efficiency gains from injecting more technology, like AI, and next-gen assets, like crypto, onto their digital platforms.

"I think the large, tech-forward banks are going to start to see margin expansion and trade more like tech stocks in the future," Tom Lee, head of Fundstrat Global Advisors, said on CNBC in late December.

While it's "too early" in either case for these initiatives to materially impact bank bottom lines this year, investors "could start to price in the potential before earnings benefits materialize," BofA's Poonawala noted.

The run higher has pushed up valuations and created some questions about whether the stock rise enjoyed by these firms can endure, even with the variety of fundamental factors working in their favor.

Big banks "aren't cheap, but we still like them," KBW head of research Chris McGratty said. Absent a market shock, McGratty thinks these firms' earnings momentum has staying power.

But others on the Street aren't as convinced.

JPMorgan, Bank of America, Citigroup, and Wells Fargo saw an average stock gain of 40% in 2025. According to calculations from Wolfe Research analyst Steven Chubak, just a third of that performance came from higher earnings growth, which means the rest of the performance was a result of multiple expansion, or how much investors are paying for each dollar of earnings from these firms.

Chubak downgraded shares of both JPMorgan and Bank of America on the expectation that their 2026 earnings will be average.

As Chubak wrote to clients in a note on Jan. 7, "It's all just a little too perfect in Bank-land."

David Hollerith covers the financial sector, ranging from the country's biggest banks to regional lenders, private equity firms, and the cryptocurrency space.

Source: Yahoo Finance