Bank of America is one of the largest banks in the United States and has a market capitalization of about $350 billion, as of early 2025. There are few other financial stocks that have achieved this level of valuation. In fact, JPMorgan Chase is the only bank with a higher valuation, and if I expand the scope to the entire financial services industry, payment processing giants Visa and Mastercard are both more valuable than BofA. But that's about it.
However, there are some financial technology (or fintech) stocks that could get there within the next decade or so if their management teams can execute on their growth strategies. Here are two, in particular, that I think could surpass Bank of America's valuation. One is a bit of a stretch, and the other has come close to a $350 billion market cap in the past.
A highly profitable business with room to grow
PayPal (PYPL +1.24%) currently has a market cap of about $75 billion, so it would need roughly 17% in annualized returns to get to $350 billion in a decade, or about 11% to achieve it in 15 years. I don't think this is too much of a stretch. After all, PayPal's market cap was nearly $350 billion once already, during the 2021 e-commerce boom.
NASDAQ: PYPL
Key Data Points
PayPal's valuation has fallen because growth has been lacking. After several years of rapid user growth, the company stagnated when the pandemic came to an end. But there's a lot to like about its future.
First, PayPal is a highly profitable business, expected to generate about $6 billion in free cash flow this year. It also has a cash-rich balance sheet, and this combination gives its management team flexibility to pursue opportunities as they arise. Just to name a few, PayPal launched its much-anticipated advertising platform in October 2024 and its PayPal Everywhere cash-back debit card, launched in September. And neither of these are reflected much in the numbers yet.
PayPal CEO Alex Chriss and his team, who are all rather new to the company and laser-focused on getting the growth story back on track, are making smart moves and focusing on efficiency and optimal capital allocation. If they can return PayPal to growth, this could be a multi-bagger over the next 10 years.
A bit of a stretch, but this bank has tremendous potential
Admittedly, it would be a bit more of a stretch to see SoFi (SOFI 0.70%) reach Bank of America's valuation. Even in a 15-year time frame, this would require 22.5% annualized returns.
NASDAQ: SOFI
Key Data Points
However, SoFi is emerging as an online bank that can completely replace customers' existing banking relationships, and the traction has been impressive. SoFi's user base has more than quintupled since the end of 2020, but it's still a relatively small bank for now (its deposit base is about 1% of Bank of America's).
Even though SoFi has already grown impressively, there could be plenty of room ahead. Most of the bank's loan volume still comes from personal loans, and there's still room to grow in that area. But other forms of lending could be massive opportunities.
For example, SoFi's home loan origination volume grew by 82% in 2024 to about $1.8 billion, but this is about 0.1% of the estimated $1.4 trillion mortgage market. Plus, homeowners in the United States are sitting on about $35 trillion in equity (the highest ever), and could be eager to tap into it if rates start to fall.
That's just one example. SoFi is just starting to get on its feet in the massive credit card industry and could add other types of loan products, as well.
SoFi wouldn't have to get as big as Bank of America to reach a similar valuation. As an online-based bank, SoFi has a superior cost structure and better margins. In the most recent quarter, SoFi's net interest margin was nearly three times that of Bank of America's. While Bank of America has nearly $2 trillion in deposits and about $1.1 trillion in loans, SoFi could likely get there with far less -- especially if it continues to build out capital-light revenue streams like its third-party loan origination platform.
Things to keep in mind
To be perfectly clear, I'm saying these stocks could ultimately be worth more than the $350 billion that Bank of America is worth today, not what it will be worth 10-15 years from now. I'm a big fan of Bank of America and its management team, and it could certainly become a trillion-dollar business, eventually.
It's also worth noting that neither of these are low-risk investments. After all, if it was easy to identify stocks that could produce massive returns, we'd all be wealthy.
PayPal has some major headwinds standing in its way, such as margin pressure and the ability to unlock new revenue streams. SoFi is a small bank today, and no online-based bank has been able to scale to become one of the larger U.S. banks -- yet. If you invest, expect quite a bit of volatility along the way, even if things go well.
