Should You Buy Bank of America Stock With $2,000 Right Now and Hold Forever?

Bank of America (NYSE: BAC) recently reported financial results for the first quarter of 2025. The numbers exceeded Wall Street expectations, as revenue totaled $27.4 billion (up 6.2% year over year) and diluted earnings per share came in at $0.90 (up 18%). The shares rose 4% the day after the earnings announcement.

But that still doesn't make up for the fact that this top bank stock is trading more than 20% below its 52-week high. Investors might be sharpening their pencils to analyze this opportunity.

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Should you buy Bank of America right now with $2,000 and hold it forever?

Strength from diversification

One of the top reasons to invest in Bank of America is because of its diversified revenue streams. It seems the business has its hands in every corner of the financial world. The company generates revenue from four key segments: consumer banking, global wealth and investment management, global banking, and global markets.

The advantage of a diversified business model is that weakness in one area can be offset by strength in another, supporting stable revenue. This was apparent in the latest quarterly results.

During the three-month period, Bank of America reported 3% revenue growth in consumer banking, while investment banking fees dipped 3%. On the other hand, volatile markets pushed equities revenue up 17% to a record to $2.2 billion.

The management team is optimistic about the economy. Bank of America's research team doesn't think the U.S. will enter a recession this year. Spending also remains healthy. "Consumer spending has been consistently growing year over year," Chief Executive Officer Brian Moynihan said on the Q1 2025 earnings call. The company's net charge-offs have remained relatively stable as well during the past few quarters.

A dominant force in the industry

Bank of America has long been a leader in the financial services sector. And this dominant position means that it is a vital part of the smooth functioning of our economy, facilitating the flow of capital. Consequently, Bank of America has long-term durability and staying power. I think it has a minimal threat of disruption.

That's another positive factor supporting the argument for why the shares should be in your portfolio. And perhaps it's what Warren Buffett appreciates as well, with Berkshire Hathaway owning 8.9% of the financial institution's shares outstanding. Investors can be confident that Bank of America will still be around and relevant 50 years from now. This can't be said about the vast majority of businesses out there.

The company also has some strong competitive advantages working in its favor. Its huge scale, demonstrated by $3.3 trillion in assets and $2 trillion in deposits, supports operating leverage, as it can cross-sell products and build deeper relationships with customers in a cost-effective way.

And like other top banks, this one also benefits from switching costs. Customers, whether individual or multinational corporations, have a hard time taking their business to competitors due to a certain level of lock-in with Bank of America.

"Forever" is a stretch

Even including dividends, which yield a notable 2.8%, the stock has lagged behind the S&P 500 index in the past three-, five-, and 10-year periods. That's clearly not an encouraging track record for prospective investors looking to outperform the benchmark.

However, now that shares trade more than 20% lower than their 52-week high, despite solid financial performance, there is a decent buying opportunity here. As of this writing, the stock can be purchased at a price-to-earnings ratio of 11. That's a reasonable valuation slightly below the trailing five-year average.

Add this to the positive traits mentioned, and Bank of America looks like a worthy investment candidate during the next three to five years. And $2,000 can buy about 52 shares.

But I wouldn't go so far as to say that this is a business to own forever. That's a very high hurdle that no stock can clear, in my opinion.

Should you invest $1,000 in Bank of America right now?

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Bank of America is an advertising partner of Motley Fool Money. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy.