AI-Fueled Equities Trading Boom Powers Wall Street’s Big Three

Through the latest reporting period, the five largest U.S. investment banks generated roughly $67 billion in equities-trading revenue, surpassing the entire 2025 total by $7 billion. The three biggest players—Goldman Sachs, JPMorgan Chase, and Morgan Stanley—accounted for $52 billion, or about 80 % of the market’s earnings. Executives attribute the surge to soaring demand for capital to back AI hardware, hyperscalers, and chip makers, as well as to expanded prime-brokerage services that lend leverage to hedge funds.

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The rally follows a broader stock-market upswing that began in October 2022, shortly before OpenAI released ChatGPT. Relaxed balance-sheet caps finalized in 2025 allowed the largest banks to treat prime-brokerage loans more flexibly, effectively increasing the amount of capital they can deploy.

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• $67 billion total equities revenue (all five banks).

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• $52 billion generated by the Big Three, representing ?80 % of the total.

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• Goldman Sachs’ equities-financing activity rose 96 % in Q3 to a record $3.37 billion.

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• JPMorgan CEO Jamie Dimon described industry-wide leverage as “the highest it’s ever been.”

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Wells Fargo analyst Mike Mayo said the AI mega-trade has turned the Big Three into direct competitors, with no other major players matching their scale. JPMorgan CFO Jeremy Barnum highlighted the “overwhelming theme” of AI, noting that capital is being tapped through a variety of mechanisms. Bloomberg Intelligence analyst Herman Chan described prime brokerage as “the ultimate scale business,” arguing that a strong equities franchise attracts hedge-fund flow. Stanford finance professor Darrell Duffie cautioned that relaxed capital rules have lowered capital ratios, making the system “somewhat more levered,” though he stopped short of labeling the situation as a crisis.

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The IMF’s warning about systemic risk underscores concerns that rapid expansion of hedge-fund leverage could amplify market stress. JPMorgan’s CFO Jeremy Barnum qualified the risk, calling hedge-fund leverage a “known unknown” that is not “riskless” but is understood. Stanford’s Darrell Duffie echoed the view that the regulatory easing is “not a good idea,” suggesting that balance-sheet expansion could become problematic if market conditions deteriorate.

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Banks do not share a uniform definition of “equities-trading revenue.” Some include clearing-service fees and other ancillary lines, while others exclude them, making direct comparisons difficult. This lack of standardization hampers precise assessment of the revenue gap between the Big Three and smaller rivals such as Bank of America and Citigroup.

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• “When it comes to the AI mega trade, the Big Three consider each other their main competitors, and that's pretty much it,” — Mike Mayo, Wells Fargo banking analyst

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• “For clients, the value isn't just a price on one trade, it's coverage and continuity,” — Rachid Alaoui, JPMorgan global head of equities

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• “Prime is one of the ultimate scale businesses,” — Herman Chan, Bloomberg Intelligence analyst

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