Is 2026 shaping up to be a breakout year for banks? As M&A activity picks up momentum, big financial institutions are positioned to capture gains from the AI wave—making large-cap bank stocks increasingly attractive. But here's the catch: smaller regional banks with exposure to problematic lending practices are a minefield. The smarter play? Focus on major players with the capital and infrastructure to ride AI adoption, while steering clear of undercapitalized institutions taking on excessive credit risk.