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One theme emerging from the early round of third-quarter earnings reports is that major U.S. banks had a really good quarter.

Add the nation’s second largest bank, Bank of America (NYSE: BAC) to the list of banks that outperformed in Q3. Bank of America’s stock price soared some 5% on Wednesday following the release of its earnings.

Here are 3 major reasons why investors are buying Bank of America stock.

1. Robust earnings and revenue beat

Bank of America generated $28.1 billion in revenue in the quarter, an 11% increase year-over-year. This topped consensus estimates of $27.5 billion in revenue.

Net income rose 23% year over year to $8.5 billion, or $1.06 per diluted share. That crushed earnings estimates of 95 cents per share.

2. Investment banking revenue soars 43%

Bank of America had a great quarter across the board, starting with its Consumer Banking business, which saw revenue rise 7% to $11.2 billion.

Consumer banking saw increases in deposits and loans, which contributed to a 9% increase in net interest income. Net interest income is a key metric for banks as it measures how much the bank makes in interest on loans minus interest paid out in deposits.

While Consumer Banking is its largest segment, Bank of America got its biggest earnings boost from its investment banking business where revenue increased 43% to $2 billion.  

3. Low valuation

Bank of America has had an excellent year, and that momentum should continue into 2026. The bank projects to generate net interest income of around $15.6 billion in Q4, which is better than $15.4 billion in Q3 and at the high end of its expected range. This will be fueled by anticipated rate cuts in October and December, which should stimulate more borrowing and loans.

For 2026, bank management sees that continuing, projecting 5% to 7% growth in net interest income, which would be similar to its projected rate for fiscal year 2025. In addition, the environment for M&A looks strong as well in 2026.

This steady anticipated growth rests upon a stock that is relatively cheap, with a P/E ratio of 14 and a forward P/E of 11. This suggests that the stock is undervalued relative to its 12-month earnings expectations.

Bank of America stock is already up 19% year-to-date, including Wednesday’s 5% surge. Based on the expected interest rate environment, which could be a sweet spot for banks, and its relatively low valuation, this could be a really good time to consider large bank stocks, particularly Bank of America.

Macroeconomic uncertainty is always a concern, but otherwise, Bank of America looks like a solid option right now.

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