Barclays’ (LSE: BARC) share price has shot up recently. Over the last year, it has risen almost 70%.
The rally here could have further to run, however. Here are three reasons why.
Investment banking revenues
One thing I like about Barclays from an investment perspective is that it’s a diversified bank. It has operations in consumer banking, commercial banking, investment banking, trading, and wealth management, so it’s not just a play on interest rates and mortgage lending.
Looking ahead, I think 2026 could be a big year for the bank’s investment banking unit. This year, we could see a lot of initial public offering (IPO) activity as private companies make the move to go public (there are some big IPOs expected including those of SpaceX, OpenAI, and Anthropic). We could also see a lot of transactions in the artificial intelligence (AI) space as companies move to bolster their capabilities in an increasingly digital economy. So, revenues in Barclays’ investment banking division should be strong.
Volatility in the markets
Another potential driver for Barclays this year is volatility in the financial markets. Already, we’ve seen volatility pick up on the back of geopolitical uncertainty.
This turbulence should benefit Barclays’ ‘Global Markets’ trading division (which is part of its investment banking division). If markets swing around wildly on the back of uncertainty, there are likely to be plenty of opportunities for the firm’s traders.
It’s worth noting that as we start 2026, global equity markets are near all-time highs. This is positive for the bank’s wealth management unit as fees from assets under management are likely to be high.
Beneficial market dynamics
Finally, I think Barclays shares may benefit from a broadening out of the market rally this year. Right now, investors are diversifying away from technology stocks into other areas of the market such as financials.
Given the attractive backdrop for the banks (some other positives include lower borrowing costs due to lower interest rates, a resilient economy, deregulation in the US, and lower costs due to automation), Barclays shares could be a beneficiary of this trend. Note that the shares currently trade on a forward-looking price-to-earnings (P/E) ratio of about nine (well below the market average), so they could appeal to those looking for value while the market is near all-time highs.
Worth a look?
Of course, there’s no guarantee that the shares will continue to rise in 2026. After such a big rise over the last year, they could pause for breath, or see some profit taking.
One risk to consider is a slowdown in the economy caused by AI-related job losses. This could see loan defaults rise.
Another risk is in relation to Donald Trump’s proposed credit card interest rate cap. This has introduced some uncertainty for card issuers.
Overall though, I’m bullish on Barclays shares as we start 2026. In my view, they’re worth considering for a portfolio today.
