Goldman and JPMorgan post record revenue as AI financing boom spreads

Goldman Sachs and JPMorgan Chase reported record quarterly revenue on Tuesday, as artificial intelligence-related capital flows lifted equities trading and investment banking. Goldman said revenue rose 39% to $20.3 billion, while JPMorgan reported a 27% increase to $58 billion.

The results showed how the AI investment cycle is feeding revenue beyond chipmakers and large technology companies. Banks are earning fees by advising on corporate transactions, arranging equity and debt sales, financing data centers and power projects, and handling heavier trading volumes tied to investor demand for AI exposure.

JPMorgan Chief Financial Officer Jeremy Barnum told reporters that AI was present across financial markets, citing large initial public offerings, index changes and heavy activity in Asia. He said much of the activity was connected to the AI theme globally.

Goldman Chief Executive David Solomon told analysts that the bank was seeing broad financing demand linked to AI. He described the period as an AI capital-expenditure super cycle involving multiple financing products, regions and industries. Capital expenditure refers to spending by companies on long-lived physical assets, such as data centers, factories and power infrastructure.

Solomon said Goldman was planning for an investment cycle of three to five years that remained in its early stages. Goldman shares rose 8% in afternoon trading, while JPMorgan gained 2%.

Equities desks capture global AI flows

The largest gains came in equities trading, where banks benefited from increased client activity and global flows linked to AI. JPMorgan’s equities trading revenue climbed 86% to $6 billion, while Goldman’s rose 72% to $7.42 billion. Together, those figures exceeded analyst expectations by $4.4 billion, according to the report.

Bank of America also reported strength in the business, with equities trading revenue up 70% to $3.6 billion. Soofian Zuberi, president and co-head of Global Markets at Bank of America, told CNBC that investors were looking for AI beneficiaries outside the United States and allocating more capital to Asian markets, including South Korea, Taiwan and Japan.

Zuberi said U.S. clients, including foundations, endowments and family offices, were increasing allocations to Asia as they searched for ways to express the AI trade beyond American markets.

Wells Fargo banking analyst Mike Mayo said the AI investment boom reached a tipping point in the second quarter. He identified Goldman, JPMorgan and Morgan Stanley as the Wall Street firms best placed to benefit from the trend, and raised his price targets for Goldman and JPMorgan after the earnings reports. Morgan Stanley is scheduled to report earnings on Wednesday.

Dealmaking and financing add to bank revenue

The AI effect also appeared in advisory and underwriting businesses. Goldman said investment banking revenue increased 55% to $3.4 billion. JPMorgan reported a 30% rise to $3.3 billion. Combined, the two banks came in $1 billion above analyst expectations.

Goldman’s second-quarter work included acting as lead adviser on the SpaceX IPO and Alphabet’s $90 billion equity issuance, as well as advising Dominion Energy on its sale to NextEra Energy. The report described those transactions as driven by the AI cycle.

Bank of America said investment banking fees increased 50% to $2.1 billion. The same AI buildout that is driving client financing needs is also beginning to affect bank operations, as firms use the technology to streamline processes while controlling staffing and other costs, Zuberi told CNBC.

Zuberi said AI was supporting banking efficiency, while banks were also essential to AI because data-center construction depends on financing. The latest bank earnings suggest that the capital demands of AI infrastructure have become a material revenue driver across trading, advisory and lending channels.

This story draws on original reporting from CNBC.