AI in action · Markets
The Banks Earning Most From the AI Stock Boom
Goldman Sachs, JPMorgan and Morgan Stanley made $52 billion from stock trading through September, helped by lending to hedge funds betting on AI. The leverage behind it is the risk.
The AI rally has a less visible set of winners: the banks that finance the trades. Goldman Sachs, JPMorgan Chase and Morgan Stanley earned a combined $52 billion in equities trading revenue so far in 2026, nearly 80% of the total for the five biggest investment banks, CNBC reported on October 21. The five together generated about $67 billion through September 30, according to company filings, $7 billion more than in all of 2025, which was itself a record year.
The main engine is prime brokerage, the business of lending to hedge funds and holding their positions. Funds have borrowed through margin loans to make leveraged bets on AI hardware, the hyperscalers and chip suppliers, and strong demand in Asia, especially South Korea and Taiwan, for memory and semiconductor stocks has added volume. Goldman's equities financing revenue rose 96% in the third quarter to a record $3.37 billion, according to its earnings presentation; JPMorgan and Morgan Stanley do not break out the figure but report a similar trend.
Scale is the advantage. Eased leverage rules for the largest US banks, finalised in 2025, freed up balance sheet, and the retreat of European banks such as Credit Suisse from equities left fewer competitors. "Prime is one of the ultimate scale businesses," said Bloomberg Intelligence analyst Herman Chan. JPMorgan chief financial officer Jeremy Barnum described AI-related financing demand as an "insatiable demand for capital."
The same figures describe a risk. Barnum placed hedge fund leverage "very much in the category of known unknowns" as a contributor of risk to the system, and Jamie Dimon said in August that industry-wide leverage was "the highest it's ever been." The International Monetary Fund warned in October about growing hedge fund leverage, crowded positions and correlated selling, and puts global hedge fund assets at $13 trillion. Stanford finance professor Darrell Duffie was more measured: "It's not a good idea, but it hasn't gotten dramatically out of whack."
Two caveats apply to the headline number. There is no agreed definition of equities trading revenue, since some banks include clearing services and others do not, and transaction taxes and stamp duties inflate Asian prime totals. What the figures do show is how closely Wall Street's own earnings now track the AI trade. A sharp unwind of leveraged AI positions, like the hedge fund selling in mid-October, tests the funds first and the desks that lend to them next.
Sources: CNBC — Goldman Sachs, JPMorgan and Morgan Stanley are dominating the AI stock boom. Here's their edge (Oct 21, 2026)