BofA Global Research Forecasts Stronger-than-Expected Economic Growth in 2026

Rhea-AI Summary

BofA Global Research (NYSE: BAC) forecasts stronger-than-consensus economic growth in 2026 driven by sustained AI investment, fiscal stimulus, and higher business capex. Key calls include US 4Q/4Q GDP of 2.4% in 2026, China GDP of 4.7% in 2026, 14% EPS growth for US equities with only 4–5% S&P price appreciation (year-end target 7,100), two Fed cuts expected in 2026, and lower private credit returns (5.4% expected vs 9% in 2025). The research warns of heightened volatility as AI’s macro effects become clearer.

Positive

• US GDP forecast +2.4% 4Q/4Q in 2026
• China GDP forecast +4.7% in 2026
• US EPS growth forecast +14% for 2026
• S&P year-end target of 7100

Negative

• S&P price appreciation limited to 4–5% despite EPS +14%
• Private credit returns forecast down to 5.4% in 2026 from 9% in 2025
• Elevated market volatility tied to AI macro impact

News Market Reaction

-0.09%

1 alert

-0.09% News Effect

On the day this news was published, BAC declined 0.09%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

US GDP growth 2026: 2.4% 4Q/4Q China GDP 2026: 4.7% China GDP 2027: 4.5% +5 more

8 metrics

US GDP growth 2026 2.4% 4Q/4Q BofA Global Research forecast for US 2026 GDP

China GDP 2026 4.7% Raised BofA Global Research forecast for 2026

China GDP 2027 4.5% BofA Global Research forecast for 2027

US EPS growth 14% Expected 2026 EPS growth for US equities

S&P price appreciation 4–5% Expected 2026 S&P 500 price return

S&P 500 target 7,100 Year-end 2026 index target from US Equity Strategy

Private credit returns 2026 5.4% Expected total returns for private credit in 2026

10Y UST range view 4–4.25% Expected 10-year Treasury yield at end-2026

Market Reality Check

Price: $54.03 Vol: Volume 34,665,851 is slig...

normal vol

$54.03 Last Close

Volume Volume 34,665,851 is slightly below the 20-day average 37,832,583, suggesting no unusual trading surge ahead of this outlook. normal

Technical Price at 54.56 is trading above the 200-day MA at 46.76, reflecting a pre-existing uptrend into this bullish macro forecast.

Peers on Argus

BAC gained 1.01% with large-bank peers also positive: WFC +2.26%, JPM +2.63%, HS...

BAC gained 1.01% with large-bank peers also positive: WFC +2.26%, JPM +2.63%, HSBC +1.03%, C +0.43%, while RY was modestly higher at 0.29%, indicating broad strength in diversified banks even though the momentum scanner did not flag a coordinated sector move.

Common Catalyst Multiple large banks had routine franchise or community news, while BAC’s headline focused on macro and AI-driven growth forecasts rather than company-specific operations.

Historical Context

5 past events · Latest: Dec 08 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Dec 08	Benefits platform launch	Positive	-0.1%	Rolled out enhanced digital Workplace Benefits and retirement solutions.
Dec 04	Marketing partnership	Positive	+0.1%	Introduced FIFA World Cup 2026™ custom credit card and bonuses.
Dec 02	Macro research outlook	Positive	-0.1%	Forecast stronger-than-consensus 2026 growth and AI-driven tailwinds.
Dec 01	Philanthropic grant	Positive	-0.1%	Awarded $1 million grant to After School Matters for teen center.
Nov 24	Community grants	Positive	+0.7%	Committed $500,000 to Tampa cultural institutions via two large grants.

Pattern Detected

Recent BAC headlines have generally been positive or strategic, but price reactions have often been small and sometimes negative, indicating a tendency toward muted or divergent short-term moves on good news.

Recent Company History

Over late Nov–Dec 2025, BAC news centered on business expansion, marketing and philanthropy rather than balance-sheet shocks. Initiatives included enhanced workplace benefits on Dec 8, a FIFA World Cup 2026™ card offer on Dec 4, and community grants such as a $1 million award to After School Matters on Dec 1. The current Dec 2 BofA Global Research piece adds a bullish macro and AI-driven growth view. Historically, these upbeat headlines produced modest, sometimes negative, 24h price reactions, suggesting limited immediate trading impact.

Regulatory & Risk Context

Active S-3 Shelf

Shelf Active

Active S-3 Shelf Registration 2025-10-01

Bank of America has an effective S-3 shelf registration dated 2025-10-01, allowing it to issue various securities such as debt, warrants, preferred stock, depositary shares and common stock. The filing, expiring on 2028-10-01, has already been used multiple times, as indicated by 10 usage events and recent 424B2 structured note offerings in December 2025.

Market Pulse Summary

This announcement outlines BofA Global Research’s above-consensus expectations for 2026, including 2...

Analysis

This announcement outlines BofA Global Research’s above-consensus expectations for 2026, including 2.4% US GDP growth, stronger China growth at 4.7%, and 14% EPS growth for US equities alongside only modest S&P 500 price gains. The theme is sustained AI-driven investment with higher volatility. In recent months, BAC headlines have centered on strategic initiatives and community support with generally mild price reactions. Investors may watch how actual growth, Fed cuts and AI-related capex track these forecasts.

Key Terms

gdp, eps, basis points, 10y treasury, +4 more

8 terms

gdp financial

"expecting above-consensus GDP growth for the US and China."

Gross Domestic Product (GDP) measures the total value of goods and services produced within a country over a set period, similar to a company’s annual sales but for an entire economy. Investors watch GDP because it signals how fast the economy is growing or shrinking, which affects corporate profits, consumer demand, interest rates and market confidence — like checking a country’s financial pulse before placing a bet.

eps financial

"Savita Subramanian, head of US Equity Strategy, expects 14% EPS growth"

Earnings per share (EPS) measures how much profit a company makes for each outstanding share of its stock by dividing the company’s profit after expenses by the number of shares. It matters to investors because it shows how much of the company’s “pie” each share represents—higher EPS usually signals greater profitability per share, helps compare companies of different sizes, and influences stock valuations and investor decisions.

basis points financial

"expect the Fed to cut rates by 25 basis points at the December 2025 meeting"

Basis points are a way to measure small changes in interest rates or percentages, where one basis point equals 0.01%. For example, if a loan's interest rate increases by 50 basis points, it's gone up by 0.50%. They help people understand tiny differences in rates that can add up over time, making financial comparisons clearer.

10y treasury financial

"expect the 10Y Treasury to end 2026 between 4-4.5%"

The 10y treasury is a U.S. government bond that pays interest for ten years and the associated yield is the market’s interest rate on that loan. Investors treat it as a yardstick for long-term borrowing costs and risk: when its yield rises, borrowing gets pricier and stocks or bonds that promise lower returns can look less attractive; when it falls, the opposite happens.

capex financial

"we could be shifting from a consumption-driven bull market to a capex-driven one."

Capex, short for capital expenditures, refers to the money a company spends to buy, upgrade, or maintain physical assets such as buildings, equipment, or technology. It matters to investors because these investments can help a company grow and improve its long-term performance, but they also represent significant costs that can impact profitability and cash flow.

private credit financial

"Head of US Credit Strategy Neha Khoda expects 5.4% total returns for private credit"

Private credit is a form of borrowing where companies or organizations obtain loans directly from private lenders rather than traditional banks or financial markets. It often involves customized financing arrangements that are not traded publicly, making it a way for businesses to access funding outside of standard channels. For investors, private credit offers the potential for higher returns, but typically comes with increased risk and less liquidity compared to more conventional investments.

high yield financial

"investors may pivot to high-yield bonds or other asset classes instead."

High yield describes an investment that offers a higher-than-average return, usually in the form of interest or dividends, because it carries greater risk of loss or default. Investors pay attention to high-yield opportunities like they would to a higher-paying job that comes with tougher conditions: they can boost income but require careful evaluation of the extra risk and the issuer’s ability to make promised payments.

k-shaped technical

"The AI-driven equity boom remains a defining feature of the "K-shaped" economy"

K-shaped describes an economic or market pattern where different groups or sectors diverge sharply: some recover or grow strongly while others continue to decline. For investors it signals uneven risk and opportunity—winners may outpace the broader market while losers lag, so portfolio performance can vary widely depending on exposure, much like two paths on a hill where one goes up and the other down.

AI-generated analysis. Not financial advice.

AI Investment Growth and Global Policy Shifts Poised to Drive Market Returns Despite Volatility

NEW YORK, Dec. 2, 2025 /PRNewswire/ -- 2025 has shown to be a strong year in markets—both in the US and abroad—leaving investors wondering how much is left in this rally. The big themes of the past year—uncertain fiscal policy, the AI surge, China's overcapacity, record fiscal deficits, and excess liquidity—are evolving rather than disappearing. As the world begins to better understand how artificial intelligence impacts economic growth, inflation, and corporate investment, BofA Global Research economists and strategists are bracing for more volatility in 2026. The AI-driven equity boom remains a defining feature of the "K-shaped" economy, adding another layer of risk.

"Despite these lingering concerns, our team remains bullish on the economy and AI," said Candace Browning, head of BofA Global Research. "We are optimistic on the two most influential economies, expecting above-consensus GDP growth for the US and China. Furthermore, concerns about an imminent AI bubble are overstated, in our view, and we expect AI investment to continue to grow at a solid pace in 2026."

Key macro calls made for the markets and economy in the year ahead are:

1. More bullish than consensus on 2026 US GDP growth
   Senior US Economist Aditya Bhave is expecting 4Q/4Q GDP growth of 2.4% in 2026. The US Economics team's above-consensus views are fueled by several factors: an expected boost by the One Big Beautiful Bill Act; increased business investment due to restoration of Tax Cuts and Jobs Act benefits; trade policy; fiscal stimulus; and the lagged effects from rate cuts by the Federal Reserve.
2. AI boom – but no bubble yet
   AI investment spend has already boosted GDP growth and our economists expect continued growth next year. Our analysis of past bubbles suggests the technology sector of the US stock market is still on solid ground. 
3. Emerging Markets get a boost
   Head of Global Emerging Markets Fixed Income Strategy David Hauner says a weaker US Dollar, lower rates, and low oil prices provide a solid backdrop for emerging markets to continue to perform well in 2026. 
4. China's economy forges ahead
   Helen Qiao, greater Chief China economist and head of Asia Economics, raised our China GDP growth forecast to ahead of consensus, and is now expecting 4.7% growth in 2026 and 4.5% in 2027. With positive signs emerging from recent trade talks and stimulus taking hold, risks to our forecast are skewed to the upside.
5. Muted S&P returns, while capex surges
   Savita Subramanian, head of US Equity Strategy, expects 14% EPS growth but only 4-5% S&P price appreciation, with a year-end target of 7100 for the index. We are watching for signs that suggest we could be shifting from a consumption-driven bull market to a capex-driven one.
6. UST yields could surprise to the downside in 2026; Two Fed cuts expected
   Nearly half of investors we surveyed expect the 10Y Treasury to end 2026 between 4-4.5%, which is flat to up from current levels. Fed cuts and a focus on lowering inflation may mean investors are too pessimistic on bond prices. Mark Cabana, head of US Rates Strategy, expects the 10Y to end 2026 at 4-4.25% with risks to the downside. Our US economists expect the Fed to cut rates by 25 basis points at the December 2025 meeting and twice in 2026 (June and July).
7. Flattish home prices with risks to the upside; may vary by region
   Chris Flanagan and our Securitized Products team expect housing to become front and center in 2026. We expect flat home price appreciation and an improvement in housing turnover. Risks are skewed to the upside dependent on Fed policy.
8. Expect volatility, especially as AI impact becomes more clear
   A better understanding of the impact that AI has on growth, inflation and capex will likely cause market volatility. The K-shaped economic recovery and fiscal dominance are other sources of expected turbulence.
9. Private credit returns likely lower in 2026; High Yield looks more attractive
   Head of US Credit Strategy Neha Khoda expects 5.4% total returns for private credit in 2026, down from 9% this year. This potential for lower returns will impact allocation decisions, and investors may pivot to high-yield bonds or other asset classes instead.  
10. Copper to perform on tight supply, strong demand
    Copper has pushed higher this year even with tepid demand from manufacturing and construction. Metals Strategist Michael Widmer expects continued supply challenges in 2026, and additional tailwinds could come from easier monetary and fiscal policy; reduced policy and trade uncertainty; and renewed demand.

BofA Global Research

The BofA Global Research franchise covers approximately 3,500 stocks and over 1,300 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named No. 2 Global Research Firm of 2024 by Institutional Investor magazine; No. 1 in the 2025 Institutional Investor Developed Europe survey; No. 1 in the 2025 Emerging Europe, Middle East & Africa survey; No. 2 in the 2025 Institutional Investor All-America survey; and No. 2 in the 2024 Institutional Investor Global Fixed-Income Research survey. For more information about any awards cited, visit https://rsch.baml.com/awards.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving nearly 70 million consumer and small business clients with approximately 3,600 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 59 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

Reporters may contact

Melissa Anchan, Bank of America
Phone: 1.646.532.9241
melissa.anchan@bofa.com

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SOURCE Bank of America Corporation

FAQ

What US GDP growth does BofA Global Research forecast for 2026 and how might that affect BAC shareholders?

BofA forecasts 2.4% 4Q/4Q US GDP in 2026; stronger growth can support banking activity and corporate lending, potentially benefiting BAC revenue.

How does BofA forecast China growth for 2026 and what is the implication for global markets?

BofA raised China GDP to 4.7% in 2026, which the firm says increases upside risk to global demand and emerging markets performance.

What S&P 500 target and EPS growth did BofA predict for 2026 (ticker BAC relevance)?

BofA expects 14% EPS growth but only 4–5% S&P price appreciation with a year-end target of 7,100, a mixed signal for bank stock valuations including BAC.

How many Fed cuts does BofA expect in 2026 and what yield path do they predict?

BofA expects two Fed cuts in 2026 and projects the 10-year Treasury ending 2026 around 4–4.25% with downside risk.

What did BofA say about private credit and fixed income returns for 2026?

BofA expects private credit total returns of 5.4% in 2026 (down from 9% in 2025) and views high-yield as relatively more attractive.

Why does BofA expect more market volatility in 2026 and how could that impact BAC shares?

BofA cites uncertain AI effects on growth, inflation, and capex plus fiscal dynamics; increased volatility could raise earnings unpredictability for banks like BAC.