Bank of America said investors appear to be swapping attention-catching growth names for an admittedly more boring group: banks. For more than two years, technology and other growth stocks have captured investor interest with conversation focused on the promise of artificial intelligence. Now, Bank of America said there’s a shift away from this group toward banks, an area of the market that is often seen as more stabile but less exciting. “Our investor conversations and stock performance indicate that a rotation into bank stocks (from non-bank financials, growth) underway,” Ebrahim Poonawala, research analyst at Bank of America, wrote in a note to clients titled “Revenge of the nerds.” Poonawala said the three “R”s — rates, regulations and rebounding customer activity — provide reason to believe the group has more room to run. On top of that, he said the stocks have “reasonable” valuations when looking from both an absolute and relative basis. Additionally, the analyst said a key reason for the constructive outlook on U.S. banks is the potential for a positive revision cycle for earnings per share. To be sure, not every stock in this sector is created equal. Poonawala said bank investors appear cautious of the premium valuations for Goldman Sachs and Morgan Stanley compared with money center names. On the other end of the spectrum, he said regional banks are likely due for a catch-up and pointed to U.S. Bancorp as a “most interesting” name in the space. Broadly speaking, banks have been a closely watched trade in recent weeks as President Donald Trump, who is known in part for his preference for deregulation, returned to Washington. Notably, members of his administration over the weekend halted much work done by the Consumer Financial Protection Bureau, a move that’s seen as likely to boost bank stocks given the reduction in oversight. As a result, the SPDR S & P Bank ETF (KBE) and SPDR S & P Regional Banking ETF (KRE) have climbed around 6.3% and 6.7%, respectively, in 2025. By comparison, the S & P 500 had added just above 3%. .SPX KBE,KRE YTD mountain The S & P 500 and two bank ETFs, year to date
