We recently compiled a list of the 8 Most Profitable Bank Stocks To Buy According to Analysts. In this article, we are going to take a look at where HDFC Bank Limited (NYSE:HDB) stands against the other AI stocks investors shouldn’t miss.
The US Banking Industry: Expectations from the New Admin
Financials is one of the sectors being deemed as winner post Trump’s victory with investors betting on looser regulation and higher M&A activity. Goldman Sachs CEO David Solomon pointed to the optimism in the environment, saying:
“There has been a meaningful shift in CEO confidence, particularly following the results of the US election”
Yahoo reported that Gabelli Funds portfolio manager Mac Sykes thinks that the deregulation will benefit the banks and that he forecasts lighter oversight of the banking market as a catalyst for the group.
While many are looking forward to the possibility of finally being able to make acquisitions in the financial space under the new US admin, UBS CEO Sergio Ermotti joined CNBC and stated that he doesn’t think there is going to be a lot of deregulation. Rather, he sees a rationalization of the existing banking regulation, which he thinks is appropriate for big banks that shouldn’t be ‘massively deregulated’. Simultaneously, he sees consolidation allowed in the US among second-tier banks.
At the same time, Bank of New York Mellon CEO Robin Vince is more optimistic about Trump’s return to the White House in terms of the impact on the financial sector. As he joined Yahoo Finance at the 2025 World Economic Forum, he was not that concerned regarding the risks tied to potential loose regulation. He stated:
“To see a government that’s really focused on growth and being able to make the economy everything that it can be, because ultimately, as one of America’s leading banks, we are focused on helping our customers to be able to grow and thrive. You know, that’s what our platforms are all about”
Our Methodology:
In order to compile a list of the 8 most profitable bank stocks to buy according to analysts, we used stock screeners to shortlist bank stocks with over $1 billion TTM net income. Moving on, we shortlisted the top 8 stocks from our list which had the highest average upside potential, as of February 3. The 8 most profitable bank stocks to buy according to analysts have been arranged in ascending order of their average upside potentials.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A business owner tallying their profits in the back office of a local banking branch.
HDFC Bank Limited (NYSE:HDB)
Average Upside Potential: 15.92%
TTM Net Income: $8.039 Billion
The Indian HDFC Bank provides banking and financial services to individuals and businesses. The Bank’s distribution network included 9,143 branches and 21,049 ATMs across 4,101 cities/towns as of December 31, 2024. The Bank’s international operations encompass four branches in Hong Kong, Bahrain, Dubai, and an IFSC Banking Unit (IBU) in Gujarat International Finance Tech City.
HDFC Bank serves as one of the largest private lenders in India which successfully entered the $100-billion market-cap club in 2023 and became the world’s 7th largest lender, following its reverse merger with its parent company, HDFC Ltd. Currently, the Bank is trying to normalize its credit deposit ratio with the deposit growth outpacing its loan growth. The deposit growth has been robust despite the challenging macro environment. At the same time, HDFC is achieving better distribution, with the addition of ‘about over 1,000-odd branches over a year-on-year period, on a 12-month period’, as reiterated by the CEO during the firm’s recent Q3 FY’25 earnings call.
For the quarter ended December 31, 2024, the Bank’s net revenue rose by 6.3% to ₹421.1 billion from ₹396.1 billion in the prior-year quarter. The Bank’s average deposits were reported to be ₹24,528 billion for the quarter, demonstrating a growth of 15.9% over the year. The Bank posted a standalone net profit of ₹16,736 crore for the quarter.
Overall HDB ranks 7th on our list of the most profitable bank stocks to buy according to analysts. While we acknowledge the potential of HDB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HDB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.