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These 3 Banks Are Rallying Into Year-End, But Will It Continue?

Written by Sam Quirke on December 20, 2025 

Key Takeaways

• Bank stocks are outperforming even as the Fed shifts to a softer monetary stance, with major names like Citi, Goldman Sachs, and Wells Fargo showing strong 2025 gains.
• Citigroup Inc. has surged nearly 60% YTD, driven by earnings beats, restructuring momentum, and a fresh J.P. Morgan upgrade.
• While Goldman Sachs Group Inc. shows strong operational results, valuation concerns are growing; Wells Fargo & Co. may offer the most upside as a potential late-cycle performer.

While artificial intelligence (AI) has dominated headlines for much of the year, and sent many tech stocks soaring, some of the strongest performance across equities has come from far less glamorous corners. Bank stocks are in the middle of a standout run, with the Financial Select Sector SPDR ETF (NYSEARCA: XLF) having just hit an all-time high. That strength has come despite the Federal Reserve entering a softer phase, with rates no longer rising and expectations building that the tightening cycle is largely done, for now at least. 

That combination forces an uncomfortable but necessary question. If banks have already rallied hard into a rising rate environment, can the good times realistically continue into 2026? To answer that, let’s take a closer look at three of this year’s better-performing bank stocks and see how each is setting up in January. 

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Citi Is Leaning Into Broader Momentum

Citigroup Inc (NYSE: C) has been one of the standout stories of the year. The stock is up nearly 60% year-to-date (YTD) and more than 14% over the past month alone, supported by a string of earnings beats and improving investor confidence.

For now, it looks like this uptrend is set to continue, with J.P. Morgan last week upgrading the stock to Overweight.

The team there flagged Citi’s ability to benefit disproportionately from a solid economic backdrop and strong markets-related activity, and sees it as being more favorably exposed to key trends.

They were also impressed by improvements in Citi’s restructuring efforts, which are finally showing through in the numbers.

J.P. Morgan’s new price target of $124 implies upside of more than 10% from current levels. Even after a solid rally throughout the year, the bank is still viewed as having room to run into 2026. 

Goldman’s Valuation Might Be Starting to Get Overheated

Goldman Sachs Group Inc (NYSE: GS) has also delivered an impressive year, with shares up about 52% YTD and roughly 13% since the back end of November. The stock began December with seven consecutive sessions of gains, underscoring the strong sentiment surrounding the name.

Operationally, the performance has been hard to fault. Like Citi, Goldman has also consistently beaten earnings expectations throughout the year and benefited from improved capital markets activity and tighter cost discipline. That strength has rewarded shareholders handsomely, but it has also pushed valuation to more demanding levels.

Goldman’s P/E ratio is now at its highest point since 2018, which has prompted some analysts to strike a more cautious tone. Both Rothschild & Co and RBC reiterated Neutral or equivalent ratings last week, suggesting the stock is approaching fair value after its recent run.

That does not imply a bearish outlook, but it does suggest the easy money might already have been made, and the risk/reward profile isn’t as attractive as it once was.

Wells Fargo Could Be The Late Bloomer of The Group

Wells Fargo & Co (NYSE: WFC) has taken a bumpier path this year. The stock is up about 31% YTD and more than 10% over the past month, managing to reach all-time highs despite a handful of headline earningsmisses earlier in the first half of the year. 

That resilience has not gone unnoticed. The team at Evercore ISI recently reiterated its Outperform rating on Wells Fargo and raised its price target to $107, implying upside of more than 15% from current levels. 

Compared to Citigroup and Goldman Sachs, Wells Fargo has lagged considerably in 2025 as it works through regulatory constraints and operational clean-up.

But that underperformance is now starting to look like an opportunity. If those headwinds continue to ease into 2026, Wells Fargo arguably holds the most upside potential of the three bank stocks. 

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Further Reading

• Poll Reveals: The Top Reasons People Enjoy Doing Business in Their State [2026]
• Biggest whale in Digital Currency is buying… gold? (From Golden Portfolio)
• Tesla Is Knocking on $500 Again—Here’s What It Means For January
• A pre-IPO Play on the Starlink Hype for Under $100? (From Paradigm Press)
• Micron Just Changed the AI Cycle—and the Market Knows It
• Waste Management’s Next Chapter Is Taking Shape for Investors
• 3 Emerging Market Stocks to Buy and Hold for 2026

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