Goldman Sachs, JPMorgan, and Morgan Stanley Dominate AI Stock Boom with $52B in Equities Revenue

Goldman Sachs, JPMorgan Chase and Morgan Stanley generated a combined $52 billion in equities trading revenue so far this year, nearly 80% of the five largest investment banks' total. Company filings show the five banks earned about $67 billion through September 30. That amount exceeds the group's record revenue for all of 2025 by $7 billion. The AI stock rally, looser capital requirements and increased hedge fund lending have supported the banks' performance with one quarter remaining. Wells Fargo banking analyst Mike Mayo said the three leaders mainly regard one another as competitors for AI-related trading and have been best positioned to benefit.

Prime brokerage supplies hedge funds with margin loans, securities lending and trading services, allowing hedge funds to increase investment exposure through borrowing. The three leading banks' prime brokerages serve the largest funds across products and markets. Bank executives said last week that borrowing demand for investments in AI hardware, hyperscalers and chip suppliers had reached new highs. Goldman Sachs increased third-quarter equities financing revenue by 96% to a record $3.37 billion. JPMorgan and Morgan Stanley said similar forces supported their businesses, although neither bank discloses a separate equities financing figure. JPMorgan CFO Jeremy Barnum endorsed an analyst's description of capital demand as "insatiable" and said AI investment was drawing financing through many mechanisms.

Wall Street executives said financing demand has made the three banks' equity operations less cyclical and more dependent on durable, high-margin lending. The leaders' performance relative to Bank of America and Citigroup illustrates a growing divide in capital markets. JPMorgan global head of equities Rachid Alaoui said clients value consistent service across products and regions, particularly during market stress and volatility. Trading executives said the largest banks can absorb potential losses of $100 million from multibillion-dollar leveraged trades without jeopardizing quarterly results. Smaller or specialized banks cannot accept comparable risks on individual trades and must reject business or surrender market share. Bloomberg Intelligence analyst Herman Chan said U.S. prime brokerages have also gained from European banks, including Credit Suisse, withdrawing from equities. Chan said scale attracts hedge funds because larger equities businesses offer more opportunities to trade with counterparties.

Trading executives said Asia was the fastest-growing equities opportunity this year, while software and cloud computing giants attracted attention in U.S. markets. Alaoui said institutional investors invested heavily in South Korea and Taiwan, targeting memory chipmakers and semiconductor manufacturers supporting data center construction. The three leading banks benefited from operations across Tokyo, Hong Kong, Seoul and Mumbai. However, trading executives said transaction taxes and stamp duties inflate reported Asia prime brokerage revenue because those charges enter top-line totals. Banks also classify equities revenue differently, including whether clearing services count, complicating comparisons. The business has benefited from a stock rally that started in October 2022, weeks before OpenAI launched ChatGPT.

Morgan Stanley CEO Ted Pick said on the bank's earnings call that equities remain an attractive asset class, other factors being equal. The CEOs of Goldman Sachs and Morgan Stanley have said AI infrastructure development remains at an early stage. However, analysts said an AI downturn could hurt those banks more than competitors if the technology proves less transformative than hoped. The International Monetary Fund warned this month that increasing hedge fund leverage, crowded investments and correlated selling could create financial stability risks. The IMF estimated global hedge fund assets at $13 trillion. JPMorgan CEO Jamie Dimon said in August that industrywide leverage had reached an unprecedented level, but Dimon did not characterize the risk as a threat to financial markets.

Wall Street executives and analysts said the industry absorbed several hedge fund failures this summer without becoming unsettled. Situational Awareness, the hedge fund run by former OpenAI researcher Leopold Aschenbrenner, attracted the most attention, while several smaller firms also underwent forced unwinding. Alaoui said prime brokerages have learned to act promptly on margin calls and reduce risk when markets move against clients. Alaoui said some investors were forced to unwind positions over the summer, reducing leverage and risk before markets moved on.

Trump administration regulators loosened certain leverage requirements for the largest U.S. banks, allowing expansion in balance-sheet-intensive businesses such as prime brokerage. Regulators finalized the changes in 2025 and permitted banks to adopt the changes as early as January. The changes relaxed balance-sheet limits that had treated Treasurys and collateralized prime brokerage loans like riskier assets. Stanford University finance professor Darrell Duffie said reduced capital requirements increased system leverage, an undesirable change that had not produced a dramatic imbalance. Duffie said larger markets and greater volatility can increase trading, derivatives activity and leverage without necessarily creating cause for alarm. Wall Street executives downplayed leverage concerns, citing collateral and frequent stress tests as protections. Barnum said last week that hedge fund leverage represents a recognized but uncertain source of systemic risk, rather than an absence of risk.