Image source: Getty Images
The Barclays (LSE:BARC) share price has climbed 75% in the last 12 months. But with the way 2026 is shaping up, I don’t think a repeat performance next year is out of the question.
Unlike other FTSE 100 banks, Barclays combines a significant investment banking operation with its retail operations. And this could be a big advantage over the next 12 months.
Investment banking
Exactly how much of Barclays’ total sales come from investment banking varies from year to year. It’s a cyclical business, so revenues can fluctuate over time.
In 2024, though, the investment banking division accounted for around 50% of total revenues. And that wasn’t an especially strong year for the industry.
Given this, I think a strong year for mergers, acquisitions, and initial public offerings (IPOs) could be a powerful force behind the Barclays share price. And that’s my expectation in 2026.
One reason for this is the prospect of lower interest rates. But another is the expected IPOs of some big names that the stock market is likely to be excited about.
Big names
It’s widely expected that OpenAI – the company behind ChatGPT – is going to look to IPO in 2026. The firm itself has been quiet on this, but investors are starting to think it’s coming.
On top of this, SpaceX – Elon Musk’s reusable rocket business – is also set to hit the public markets. And in this case, the company has started making its preparations.
There’s also Anthropic – another artificial intelligence (AI) name – that’s making tangible plans. So 2026 could be a huge year for IPO activity and investment banks stand to benefit.
Barclays will have competition from the likes of Goldman Sachs and JP Morgan when it comes to these specific names. I’m not ruling it out, but I’m not counting on it either.
Beyond 2026
In general, I think 2026 could be a big year for IPOs. And whether or not it’s the headline names, I’m expecting a strong performance from the Barclays investment banking division.
The big question is whether or not this is already reflected in the share price – and I’m not convinced it is. But investors should look beyond the next 12 months when making decisions.
The stock is trading at a price-to-book (P/B) ratio of 1, which is unusually high for the firm. That’s not to say it can’t go up with a strong 2026, but it does create a long-term challenge.
Barclays is going to need to achieve higher returns on equity than it has managed in previous years to justify that multiple. It’s not impossible, but I don’t see it as an obvious opportunity.
A short-term buy?
I’m expecting the next year to be an unusually strong one for investment banking revenues. And I think this could drive the Barlcays share price higher in 2026.
My suspicion, though, is that this is likely to be a cyclical boost, rather than a more durable one. As a result, I don’t really see this as a source of long-term consistent growth.
That’s what I look for with investment opportunities. And that’s why I’m focusing my attention elsewhere when it comes to stocks to buy.
This story originally appeared on Motley Fool
