Bank of America’s Top Stock Picks for 2025: A Bullish Outlook
Bank of America has released its highly anticipated list of top stock picks for 2025, featuring a diverse range of companies poised for significant growth. The firm’s analysts highlight several key factors driving their bullish outlook, including the anticipated strengthening of the US economy, the continued expansion of the artificial intelligence (AI) sector, and the recovery of the regional banking industry. This selection offers investors a compelling mix of established leaders and companies with substantial upward potential, promising a variety of investment opportunities across diverse sectors.
Key Takeaways: Bank of America’s 2025 Predictions
- Block (SQ): Positioned for strong growth fueled by a recovering US small and mid-sized business (SMB) market and increased crypto adoption.
- East West Bancorp (EWBC): Presents compelling risk-reward potential, backed by high capital levels and resilient margins.
- Cadence Design Systems (CDNS): A strong player in the AI sector exhibiting robust growth and diversification.
- Chevron (CVX): A top pick with multiple catalysts set for 2025, anticipating a positive trajectory in energy.
- Nvidia (NVDA): A leader in the AI sector, yet with potential for second-half shifts in investor interest towards other chipmakers.
Block (SQ): A Fintech Leader Poised for Growth
Bank of America analyst Jason Kupferberg and his team are exceptionally bullish on Block (SQ), identifying it as their “top Payments pick for ’25.” They foresee significant outperformance driven by several key factors. Kupferberg notes, “As a US-centric re-acceleration story, we believe shares can outperform.” This optimism stems from the expectation of a more robust US SMB backdrop and Block’s “healthy combination of top-line growth and profitability,” as highlighted in the company’s preliminary 2025 guidance.
Crypto and Regulatory Tailwinds
While acknowledging that 41% of SQ’s revenue comes from Bitcoin trading, Kupferberg emphasizes that “most of it is pass-through, and only 3% of SQ’s gross profit comes from bitcoin,” minimizing the risk associated with crypto market volatility. The firm also anticipates a positive impact from a potential increase in crypto prices and a lighter regulatory environment under a new administration. With Block shares already up nearly 16% year-to-date, the potential for further growth appears substantial.
East West Bancorp (EWBC): A Regional Bank with a Strong Outlook
Analyst Ebrahim Poonawala highlights East West Bancorp (EWBC) as another top pick, emphasizing its strong risk/reward profile. He states, “We believe the stock offers among the most compelling risk/rewards to investors looking to position for accelerating loan growth.” This positive outlook is underpinned by EWBC’s robust financial position. Poonawala notes the bank possesses “some of the highest levels of capital” among its peers, making it well-positioned to weather potential economic headwinds. The bank’s “resilient margins with tailwinds on the horizon,” further bolster the firm’s confidence.
Resilience and Growth Potential
Poonawala adds, “Additionally, strong capital levels and best-in-class profitability offer defensibility if the economy surprises negatively.” This highlights EWBC’s resilience and its ability to navigate potential economic downturns. With shares already up 33% in 2024, Bank of America anticipates considerable further upside for this regional banking leader.
Cadence Design Systems (CDNS): A Key Player in the AI Boom
Analyst Vivek Arya views Cadence Design Systems (CDNS) with considerable enthusiasm, citing the company’s impressive progress and strong growth prospects. His recent meeting with management reinforced his constructive view. Arya notes CDNS’s strategic investments in digital technologies, allowing them to broaden their reach in the semiconductor industry. He writes, “CDNS has invested aggressively in digital, revamping its entire portfolio and are now present at all 20 top semi companies (vs. only 2 historically), performing well across the different digital design phases.”
Defensive Position in a Growing Market
The analyst also highlights the company’s defensive positioning within the AI market. Arya explains, “We see CDNS as an attractive/defensive alternative levered to durable R&D [research & development] and higher visibility subscription-driven AI spending versus (lumpier) hardware/capex exposed semis.” This indicates a strong and consistent revenue stream, less susceptible to the volatility often associated with hardware-focused semiconductor companies. His price target increase to a Street-high $365 per share further underscores his bullish outlook.
Chevron (CVX): Navigating a Pivotal Year
Bank of America’s analysis of Chevron (CVX) paints a picture of a company facing a crucial year filled with both opportunities and challenges in 2025. The firm highlights several key factors influencing their outlook, categorized into distinct areas including the Gulf of Mexico (GoM), Tengizchevroil (TCO), Hess Corporation’s impact, refining/biofuels developments, and potential impacts from changes in Venezuela. While the analysis acknowledges potential negative catalysts, the firm maintains a “Buy” rating. They reiterate, “2025 is a pivotal year for CVX with a lot of catalysts…We reiterate our Buy thesis. It is our top pick going into 2025.“
Nvidia (NVDA): A Two-Sided Forecast for a Tech Giant
In evaluating Nvidia (NVDA), Bank of America projects a bifurcated year for the AI chip leader. They anticipate strong momentum in the first half of 2025 fueled by ongoing AI investments and the deployment of Nvidia’s Blackwell technology by US cloud customers. However, the firm suggests potential shifts in the second half. “We see 2025 as a year of two different trends. In the first half, AI investments and NVDA Blackwell deployments driven by US cloud customers sustain momentum in AI semis. However, in the 2H, interest could shift to less-crowded auto/industrial chipmakers on inventory replenishment and pick-up in auto production assuming a global economic recovery.“
Conclusion: A Diversified Portfolio for Growth
Bank of America’s stock picks for 2025 present investors with a compelling range of opportunities, spanning various sectors ripe for growth. The selection reflects a considered outlook incorporating the firm’s assessment of macro-economic trends, industry-specific dynamics, and the unique strengths of each individual company. While acknowledging potential risks, the firm’s overall sentiment is bullish, projecting a positive outlook for these selected companies across the forthcoming year.
