Goldman Sachs JPMorgan and Morgan Stanley Lead AI Trading Boom

Three of Wall Street's largest banks have captured most of the revenue generated by the equity trading boom linked to artificial intelligence, as institutional investors increase their exposure to semiconductor companies and expand leveraged positions. Goldman Sachs, JPMorgan Chase and Morgan Stanley generated a combined $52 billion in equity trading revenue through September 30, 2026, accounting for nearly 80% of the $67 billion earned by the five largest investment banks, according to company filings cited by CNBC.

The five banks collectively surpassed their full-year 2025 equity trading revenue by $7 billion, despite having one quarter remaining in 2026. Increased trading activity, demand for financing and the expansion of AI infrastructure investments have supported the industry's performance.

Mike Mayo, a Wells Fargo banking analyst, described the competitive landscape surrounding AI-related investments in comments to CNBC.

"When it comes to the AI mega trade, the Big Three consider each other their main competitors, and that's pretty much it," Mayo said. "They've been best positioned to take advantage of this market."

Financing provided to hedge funds through prime brokerage operations has become a significant contributor to the banks' equity businesses. These services include margin loans, securities lending and other trading support that allow investment funds to increase their market exposure.

Goldman Sachs reported that revenue from equity financing surged 96% year over year in the third quarter to a record $3.37 billion. JPMorgan Chase and Morgan Stanley did not disclose equivalent figures separately but described similar demand for financing, according to CNBC.

Jeremy Barnum, JPMorgan's chief financial officer, addressed the financing trend during the bank's third-quarter earnings call.

"I like your 'insatiable demand for capital' point. That feels about right," Barnum said. "In this moment where AI is such an overwhelming theme ... there is capital being tapped through all kinds of different mechanisms."

Demand has extended beyond major US technology companies to Asian semiconductor manufacturers and memory chip producers supporting data center construction. Rachid Alaoui, JPMorgan's global head of equities, identified client coverage and the ability to provide services across markets as important competitive advantages.

"For clients, the value isn't just a price on one trade, it's coverage and continuity," Alaoui told CNBC. "You want a dealer that can give you the full suite across products, and you want that service to travel with you across regions. That matters in stressed markets and periods of volatility."

The banks' balance sheets also allow them to accommodate large transactions and absorb potential losses that smaller competitors may be unable to support. Bloomberg Intelligence analyst Herman Chan said the withdrawal of European banks, including Credit Suisse, from parts of the equity business had also benefited US prime brokers.

"Prime is one of the ultimate scale businesses," Chan said. "If you have a strong equities franchise, the hedge funds will want to transact with you because you have a bigger pool of trading opportunities with counterparties."

Goldman Sachs also reported strong quarterly earnings beyond trading. According to Simply Wall St, the firm recorded third-quarter 2026 net income of $5.294 billion and nine-month net income of $17.552 billion. Its return on common equity reached 18.7%, while investment banking fees and advisory revenue supported the results.

Equity trading revenue at Goldman Sachs increased 72% from a year earlier, according to Yahoo Finance. The firm also reported that revenue from asset and wealth management increased 10% from the second quarter. Durable revenue streams, including management fees and financing, accounted for approximately 45% of its revenue during 2026, according to management commentary cited by Yahoo Finance.

Despite the strong results, Goldman Sachs shares faced pressure. Simply Wall St reported that the stock had declined 6.45% over 30 days and 16.47% over 90 days, while its one-year total shareholder return remained positive at 19.69%. Yahoo Finance reported that the shares traded at approximately 12.3 times forward earnings, compared with a sector average of 10.8 times.

The concentration of trading activity in large banks has also raised concerns about financial stability. The International Monetary Fund warned in October 2026 that rising leverage, crowded hedge fund positions and correlated selling could increase risks across financial markets if investor sentiment reverses.

Morgan Stanley CEO Ted Pick described the continuing appeal of equities during the firm's earnings call.

"We're still in a stock-based world," Pick said. "Equities are still, all things being equal, the attractive asset class."