In a recent development that has captured the attention of investors, the Royal Bank of Canada (RBC) has lowered its price target for Bank of America (BAC) stock from $50 to $45. Despite this adjustment, RBC continues to hold a positive outlook on the bank's shares, indicating a nuanced view of the financial landscape.

This price target change comes on the heels of Bank of America's first-quarter financial results, which were released yesterday. These results have sparked discussions among analysts regarding the bank's performance amid ongoing macroeconomic issues that have affected various sectors.

RBC's decision to adjust its price target stems primarily from a broader analysis of the current economic climate. The bank recognizes that while macroeconomic challenges persist, Bank of America has demonstrated resilience through strong financial results. RBC analysts point out that the bank's strategic efforts to expand its deposits and loan offerings are expected to bolster its overall profits in the long term. This strategic focus could be crucial in navigating potential economic turbulence ahead.

Further reinforcing their positive outlook, RBC highlighted Bank of America's low-cost deposit base, which provides a competitive advantage in the financial markets. This aspect is particularly relevant as banks strive to attract and retain customers in a challenging economic environment.

Additionally, RBC has noted that Bank of America has made significant strides in reducing its risk profile since the Great Financial Crisis. These proactive measures are seen as essential for maintaining the bank's profit levels, especially if a recession were to materialize in the near future.

Looking ahead, analysts predict that Bank of Americas earnings per share (EPS) will increase from $3.21 in 2024 to $3.64 in 2025, with expectations of reaching $4.26 by 2026. Such projections suggest a positive trajectory for the bank, even amid fluctuating economic indicators.

However, it is worth noting that BAC's stock has experienced a decline recently, with shares falling by 10% over the past month and dropping approximately 20% over the last three months. This downturn has led some investors to reconsider their positions, reflecting a broader trend of volatility in the stock market.

Interestingly, while RBC acknowledges the potential of Bank of America, there is growing sentiment among some investors that artificial intelligence (AI) stocks may offer greater opportunities for higher returns in a shorter timeframe. A report suggests that one particular AI stock has risen significantly since the beginning of 2025, contrasting with a 25% decline in more popular AI stocks.

For investors seeking alternatives, the report highlights an AI stock that is currently trading at less than five times its earnings, positioning it as a potentially lucrative investment compared to Bank of America. This shift in focus toward AI stocks illustrates the dynamic nature of the current investment landscape.

In conclusion, while RBC's reduction in the price target for Bank of America reflects caution in response to macroeconomic concerns, the bank's overall performance and strategic initiatives suggest a level of resilience that may warrant attention from investors.

For those interested in exploring investment opportunities, the article also recommends checking out lists of top AI stocks, including the 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article was originally published at Insider Monkey.