Prediction: Bank of America Will Soar Over the Next 5 Years. Here's 1 Reason Why.

Key Points

• Bank of America's consumer investment total crossed $500 billion for the first time in the fourth quarter of 2024.

• Bank of America expects its consumer investment assets to hit $1 trillion in the next five years.

• Consumer investments provide Bank of America with more fee-based revenue.

• 10 stocks we like better than Bank of America ›

Bank of America (NYSE: BAC) is one of the largest banks in the world, operating in the U.S. and more than 35 countries worldwide. By market cap, it's the second-most valuable bank in the world, trailing only JPMorgan Chase. In the past five years, Bank of America has outperformed the S&P 500, with total returns close to 125% in that span, compared to the index's 112% (through Sept. 12).

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Even with Bank of America's market-beating returns over the past five years, the next five years could continue the same momentum. The reason comes down to one factor: its consumer investment business.

Image source: Getty Images.

The consumer investment business involves standard brokerage accounts, wealth management, and financial advisory services. In the fourth quarter of 2024, Bank of America's consumer investment assets crossed the $500 billion mark for the first time in the company's history.

The company noted that this amount has doubled every five years, and it expects to hit $1 trillion in the next five years. In the second quarter of this year, it reached around $540 billion (up 13% year over year).

Hitting this mark won't guarantee that Bank of America's stock will soar (nothing guarantees that), but the growth of its consumer investment business means it will earn much more fee-based income and see higher margins than from other revenue sources like traditional lending. This should be a nice boost to Bank of America's profitability, especially as we anticipate interest rates getting lowered over the next few years, which could impact the bank's main revenue source.

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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. Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.