Goldman Sachs and JPMorgan Chase posted record quarterly revenues, fueled by substantial gains in equities trading and investment banking, demonstrating that the global AI boom extends beyond tech giants. Goldman's revenue climbed 39% to $20.3 billion, and JPMorgan's rose 27% to $58 billion.
A key factor in this surge was investors' broadened search for AI beneficiaries, leading to significant capital inflows into Asian markets such as South Korea, Taiwan, and Japan. This activity, including big IPOs and index rebalancing, contributed to what JPMorgan CFO Jeremy Barnum called a "very, very, very active environment" driven by AI. Goldman CFO Denis Coleman added that banks are in the midst of an "AI capex super cycle," necessitating financing across all instruments, regions, and industries.
The AI impact was particularly evident in equities trading, where revenues saw massive increases. JPMorgan's equities trading revenue rose 86% to $6 billion, and Goldman's jumped 72% to $7.42 billion, together exceeding analysts' expectations by $4.4 billion. Investment banking also saw significant growth, with Goldman's revenue up 55% to $3.4 billion and JPMorgan's up 30% to $3.3 billion, a combined $1 billion more than anticipated. Bank of America also benefited, with equity trading revenue up 70% to $3.6 billion and investment banking fees up 50% to $2.1 billion.
These banks are actively advising on AI-related deals, such as Goldman's lead advisory role in the SpaceX IPO and Alphabet's $90 billion equity issuance. They are also financing data centers and power infrastructure, underwriting debt and equity offerings, and facilitating the increased trading activity. Goldman CEO David Solomon noted a "ripple effect" across the American economy, creating new opportunities for banks to provide financing and trading solutions. Wells Fargo analyst Mike Mayo identified Goldman Sachs, JPMorgan, and Morgan Stanley as the top beneficiaries of this trend, indicating a multi-year investment cycle that is still in its early stages.
The AI boom is not only generating external revenue but also prompting banks to implement AI internally to streamline processes, increase revenue, and manage headcount and expenses. The "AI capex super cycle" reflects a demand for financing across all financial instruments globally, illustrating how banks are both driving and being driven by the AI revolution.
