As U.S. bank stocks continue their remarkable rally into 2026, Barclays has lifted price targets across the sector, projecting that the financial industry's outperformance has further to run. The investment bank raised its target on Wells Fargo to $113 from $94 and Goldman Sachs to $1,048 from $850, while reiterating buy ratings on both names.

The upgrades come as bank stocks hit fresh all-time highs, with the sector having gained more than 30% in 2025 and showing no signs of slowing in the new year.

The Bull Case for Banks

Barclays analysts laid out several factors driving their optimism for major U.S. banks:

  • Capital markets revival: Investment banking activity, which collapsed in 2022-2023, has rebounded strongly. M&A advisory, equity underwriting, and debt issuance have all recovered, driving fee income.
  • Trading strength: Volatility has provided trading desks with opportunities to generate outsized revenues, and client activity remains elevated.
  • Net interest income stability: While interest rate cuts have compressed margins, deposit costs have also declined, providing offset.
  • Regulatory tailwinds: The incoming administration is expected to ease capital requirements and reduce regulatory burden, freeing banks to return more capital to shareholders.
  • Economies of scale: The largest banks benefit from operating leverage that smaller competitors cannot match.

"We believe the Money Centers have more room to run given the favorable capital markets/regulatory backdrop and their economies of scale advantage," Barclays analysts wrote in their research note. They forecast double-digit earnings growth for the sector in 2026.

Wells Fargo: The Turnaround Story

Wells Fargo has been one of the sector's standout performers, with shares gaining 36% in 2025 despite the bank still operating under a Federal Reserve asset cap imposed after its fake accounts scandal. The new $113 price target implies approximately 25% upside from current levels.

Barclays' bullish view rests on several factors:

  • Expense discipline: CEO Charlie Scharf has driven significant cost reductions, improving the bank's efficiency ratio
  • Asset cap removal potential: While timing remains uncertain, eventual lifting of the Fed-imposed constraint could unlock significant growth
  • Mortgage market positioning: If housing activity recovers, Wells Fargo's dominant mortgage franchise would benefit disproportionately
  • Capital return: The bank has been aggressively buying back shares, supporting per-share earnings growth

Goldman Sachs: The Trading King

Goldman Sachs shares surged 57% in 2025, driven by a resurgence in its core trading and investment banking businesses. The new $1,048 price target—up from $850—suggests Barclays sees approximately 15% additional upside.

The bull case for Goldman centers on:

  • Trading dominance: Goldman's trading desks have consistently outperformed peers, capturing market share in equities and fixed income
  • Investment banking pipeline: A backlog of M&A deals and IPOs positions the firm for strong advisory revenue
  • Asset management growth: The firm has been building its alternatives business, which generates higher-margin fee income
  • Strategic focus: CEO David Solomon has streamlined the business, exiting consumer banking and concentrating on institutional strengths

Monday's Record-Setting Session

The Barclays upgrades come on the heels of a historic trading day for bank stocks. On Monday, all five of America's largest banks—JPMorgan Chase, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley—hit all-time intraday highs simultaneously.

The session saw:

  • Goldman Sachs: Up 4% to $914
  • JPMorgan Chase: Up 3.1%
  • Wells Fargo: Up 2.8%
  • Bank of America: Up 2.4%
  • Morgan Stanley: Up 2.2%

The coordinated strength across the sector suggests institutional investors are making broad bets on financials rather than picking individual winners.

Earnings Season Ahead

Bank stocks face their first major test of 2026 when the sector kicks off earnings season:

  • January 13: Citigroup
  • January 14: JPMorgan Chase, Goldman Sachs, Wells Fargo
  • January 15: Bank of America, Morgan Stanley

These reports will reveal whether the sector's optimism is justified by fundamentals or whether stocks have gotten ahead of themselves. Particular attention will focus on:

  • Net interest income trends and margin guidance
  • Investment banking pipelines and deal activity
  • Credit quality and loan loss provisions
  • Capital return plans for 2026

The Regulatory Wildcard

Much of the sector's rally has been driven by expectations of regulatory relief under the new administration. Banks anticipate:

  • Basel III Endgame modifications: Proposed capital requirement increases may be softened or delayed
  • Stress test changes: The annual Fed stress tests could become less punitive
  • M&A approval: Bank mergers that were effectively blocked may receive approval
  • Consumer protection rollback: CFPB enforcement is expected to ease

If these expectations materialize, banks could have more capital to return to shareholders through dividends and buybacks. If regulatory relief disappoints, the stocks could give back some of their gains.

Risks to the Bull Case

Despite the optimism, bank investors face several risks:

  • Economic slowdown: If the economy weakens more than expected, credit losses could rise significantly
  • Rate cuts: Further Fed rate reductions would compress net interest margins
  • Commercial real estate: Exposure to troubled office properties remains a concern for regional and money center banks
  • Valuation: After massive gains, bank stocks are no longer cheap by historical standards

The Bottom Line

Barclays' upgraded price targets reflect Wall Street's growing conviction that bank stocks have entered a new bull market. With capital markets activity rebounding, regulatory relief on the horizon, and earnings growth projected in double digits, the sector has powerful tailwinds. However, with stocks at all-time highs and expectations elevated, the margin for disappointment has narrowed. The upcoming earnings season will test whether the rally can continue.