Wall Street’s biggest banks are emerging as major beneficiaries of the global artificial intelligence investment wave, as billions of dollars flow into data centres, energy infrastructure, public markets and large corporate transactions.
The impact was visible across the latest quarterly results of Goldman Sachs, JPMorgan Chase and Bank of America. From a surge in equities trading to stronger investment banking fees, the AI investment cycle is creating business for banks across several parts of their operations.
Goldman Sachs and JPMorgan Chase both reported record quarterly revenue, with Goldman’s revenue rising 39% to $20.3 billion and JPMorgan’s increasing 27% to $58 billion.
AI investment boom reaches Wall Street
The AI boom has increasingly expanded beyond technology companies and chipmakers. Banks are now benefiting from the huge amount of capital needed to build the infrastructure behind the technology.
They are advising companies on deals, financing data centres and power infrastructure, underwriting debt and equity offerings, and handling increased trading activity as investors search for companies and markets that could benefit from AI.
Goldman CEO David Solomon said the trend was creating opportunities across different markets and financing products.
“We are in the middle of an AI capex super cycle where there are demands on financing in every single financing instrument, in every region of the world and across every single industry,” Solomon told CNBC.
Capex, or capital expenditure, refers to money businesses spend on long-term physical assets and infrastructure.
Solomon said Goldman is preparing for a three-to-five-year investment cycle that is still in its early stages. He also described the wider economic impact as “a ripple effect” that is creating new opportunities for banks to offer financing and trading solutions across public and private markets.
Trading desks see massive gains
The strongest evidence of the boom was visible in equities trading, where global capital flows and major transactions helped banks deliver some of the biggest revenue surprises of the quarter.
Equities trading revenue at JPMorgan surged 86% to $6 billion, while Goldman reported a 72% increase to $7.42 billion. Together, the two banks generated $4.4 billion more in equities trading revenue than analysts had expected.
Bank of America also benefited from the increased activity, with equities trading revenue rising 70% to $3.6 billion.
JPMorgan CFO Jeremy Barnum said AI was playing a major role in the unusually active market environment.
“These are booming environments with a ton of activity, big IPOs, big index rebalancing, a lot of activity in Asia,” Barnum said Tuesday. “A lot of it is downstream of the AI theme, writ large on a global basis. It’s just a very, very, very active environment.” Barnum said AI is “everywhere in financial markets.”
Investors look beyond the US for AI winners
The AI trade is also becoming more global. Investors are increasingly looking beyond US technology companies for businesses and markets that could benefit from the investment cycle.
Money has flowed into Asian markets including South Korea, Taiwan and Japan, according to Soofian Zuberi, president and co-head of Global Markets at Bank of America.
“People looked at the AI trade and said, ‘What are the best reflections of it outside the U.S?,’” Zuberi said. “You’ve got American clients who are diversifying and allocating more money to Asia, including foundations, the endowments, and family offices.”
The change shows how the AI investment theme has broadened from chips and software to areas including power generation, infrastructure and other industries needed to support the technology.
Wells Fargo banking analyst Mike Mayo said Goldman Sachs, JPMorgan and Morgan Stanley are the three biggest Wall Street beneficiaries of the trend.
The AI investment boom “reached a tipping point” in the second quarter, Mayo told CNBC.
Following the strong results, Mayo raised his price targets for Goldman and JPMorgan. Goldman shares jumped 8% in afternoon trading, while JPMorgan gained 2%.
AI boom lifts investment banking fees
The wave of AI-related spending and corporate activity also boosted investment banking revenue.
Goldman’s investment banking revenue jumped 55% to $3.4 billion, while JPMorgan’s climbed 30% to $3.3 billion. Combined, the two banks generated $1 billion more than analysts had expected.
Bank of America also reported a sharp increase, with investment banking fees rising 50% to $2.1 billion.
Goldman served as lead adviser on the SpaceX IPO and Alphabet’s $90 billion equity issuance during the quarter. It also advised Dominion Energy on its sale to NextEra Energy, transactions linked to the broader AI investment cycle.
Banks benefit from AI on both sides
The relationship between Wall Street and AI is increasingly working in both directions. Banks are earning fees from companies raising and investing money for the AI buildout, while also using the technology inside their own businesses.
AI could help banks streamline processes, improve efficiency and increase revenue without requiring the same level of growth in headcount and other expenses.
“AI is driving banking by helping streamline processes,” Zubieri said. “And banking is driving AI, because without banking you can’t have all these data centers financed.”
The latest earnings show that the financial impact of the AI boom is no longer limited to the companies designing chips or building AI models. As the investment cycle expands into data centres, energy, infrastructure and global markets, Wall Street is increasingly becoming one of the key channels through which the AI buildout is financed — and one of its biggest financial beneficiaries.