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Barclays shares surge: stick or twist?

Barclays shares surged on Wednesday after the US and Iran announced a ceasefire agreement for two weeks. But there’s more to explore.

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Barclays (LSE:BARC) shares jumped almost 8% this morning (8 April). The stock is now up 72% over 12 months, but this doesn’t tell the whole story. Shares had pulled back as the market became increasingly worried about the negative impact of AI, and as the war in the Gulf damaged the global economy.

So, as a Barclays shareholder, should I stick with my holdings or look for better opportunities elsewhere?

XXX

The valuation base

At current levels, Barclays doesn’t look overly expensive.

It trades with a forward price-to-earnings (P/E) of just 7.9, a price-to-book of 0.83, and analysts at 14 brokerages have a consensus price target of 533p. This implies a 25% further undervaluation from here.

Operational momentum is strong too. Earnings per share hit 45.8p in 2025, up 33% on the prior year, and forecasts point to 53.1p in 2026 and 62.8p in 2027 as the investment banking division continues its recovery.

Revenue came in at £33.2bn last year with operating profit of £9.1bn. A forward dividend yield of 3.69%, covered nearly four times by earnings, adds extra appeal for income investors.

The SpaceX catalyst

The most underappreciated near-term driver may be one that wasn’t on many radars six months ago.

SpaceX is targeting a June IPO — potentially with a valuation of $1.75trn — through a 21-bank syndicate codenamed Project Apex. Barclays has secured the exclusive UK regional lead role, responsible for aggregating demand from both institutional and retail investors on this side of the Atlantic.

For Barclays’ investment bank, the fees and reputational lift from serving as the UK’s gateway to what could become the largest IPO in history are huge. The mandate positions Barclays to capture disproportionate follow-on deal flow as SpaceX scales post-listing.

In short, investing banking income could really surge, especially when coupled with the volatility of the Gulf conflict.

AI risk

If the war does come to a permanent conclusion, investors will undoubtedly return their attentions to AI. And not everyone is excited.

In a widely-read February 2026 memo, macro research shop Citrini outlined what it called the “Intelligence Displacement Spiral” — a scenario in which accelerating AI adoption triggers a feedback loop of white-collar layoffs, falling consumer spending, and further AI investment, with no natural brake.

It was framed as a thought exercise. However, in this interconnected world, the transmission mechanisms run directly through Barclays’ balance sheet. This includes mortgage risk stemming from prime borrowers — white-collar workers. The memo also points to PE-backed software defaults — what Citrini describes as “a daisy chain of correlated bets on white-collar productivity growth“.

Stick or twist

Barclays stock doesn’t appear overpriced based on the valuation data. What’s more, the SpaceX deal is a concrete catalyst the market may still be pricing too conservatively.

However, banks reflect the health of the economy, and there’s certainly some risk emanating from AI, as well as the directionless UK economy.

Personally, I’m holding my Barclays shares — a holding much smaller than it used to be. It’s still worth considering, but fair value may be closer than some expect.

James Fox has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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