Bank of America Is One of the Largest Financial Companies by Market Cap. But Is It a Buy?

Key Points

• Bank of America is the second largest U.S. bank and the fifth largest financial company by market capitalization.

• The company just reported strong second-quarter earnings.

• There could be some positive tailwinds coming for the banking industry.

• 10 stocks we like better than Bank of America ›

To say that Bank of America's (NYSE: BAC) progress in the 15 years since the end of the financial crisis has been impressive would be an understatement. The bank went from being one of the most troubled of the major financial institutions to one of the most respected in the industry. In fact, Bank of America is now the second largest U.S. bank stock by market cap.

However, Bank of America could still be an attractive business to invest in, especially now. Let's take a quick look at where Bank of America ranks in the overall financial sector, how the business is doing, and why now might be a smart time to buy.

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Image source: Getty Images.

The largest financials companies by market cap

The largest financial company in the world is Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), with a market cap of more than $1 trillion. Many investors don't realize it, but Berkshire is technically an insurance company at heart -- Warren Buffett built its empire using insurance float from subsidiaries like GEICO and others.

With that in mind, here's where Bank of America fits among the largest financial companies (the link leads to our up-to-date list) based in the United States by market cap:

Data source: CNBC.com. Market caps as of 7/21/2025.

So, as of this writing, Bank of America is the fifth largest financial sector company by market cap and the second largest bank stock. It's likely it will stay this way for at least a little while, as there's a wide gap between Bank of America and the No. 4 (Visa) as well as with the No. 6, fellow big bank Wells Fargo (NYSE: WFC), which has a $260 billion market cap.

How it's going

Bank of America, and most other large bank stocks for that matter, just reported second-quarter results. In general, the numbers looked strong, and here are some key highlights:

• Revenue and EPS grew by 4% and 7% year over year, respectively.
• Customer deposits grew 5% to $2 trillion. Bank of America has the No. 1 retail deposit market share, and this growth rate was better than most peers.
• The bank achieved a 10% return on equity (ROE), which is generally considered to be the threshold of a strong ROE.
• Consumer banking added 175,000 net new checking accounts and consumer investment accounts grew by 13% thanks to strong market performance and inflows of capital.
• Bank of America has the No. 3 investment banking market share year-to-date.
• The company is doing arguably the best of the big banks when it comes to leveraging AI. It has 1,400 AI and machine learning patents, and, just to name one example, its "Ask Merrill" and "Ask Private Bank" AI tools get 23 million interactions per year.
• Bank of America spent $5.3 billion on stock buybacks and increased its dividend by 8%.
• Net interest yield increased by 3 basis points year over year despite no recent Federal Reserve rate cuts.
• Bank of America's net charge-off rate improved by four basis points compared with a year ago.

I'm paying close attention to numbers like the net interest margin in the persistent high-rate environment, and the bank's NCO rate, which is a great indicator of the financial health of its customers.

Is Bank of America a buy?

The bottom line is Bank of America is an excellent institution, and its management has done a great job of embracing technology. If rates start to fall later this year as many expect, it could provide a nice tailwind for the stock, and the banking industry as a whole.

In fact, there could be several positive tailwinds in the next few years, including a looser regulatory environment, the surge in IPO and M&A activity we're seeing, and potential lower corporate tax rates. With Bank of America shares trading for less than 13 times forward earnings and a historically attractive valuation of less than 1.3 times book value, Bank of America could be an excellent performer over the next few years.

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Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Matt Frankel has positions in Bank of America and Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, Mastercard, and Visa. The Motley Fool has a disclosure policy.