AI craze boosts investment banking income, Wall Street banks report strong second-quarter earnings
Major Wall Street banks kicked off the second quarter earnings report of U.S. stocks with strong results. Benefiting from the substantial growth in stock trading and investment banking business, the overall performance of Wall Street institutions exceeded market expectations. The financial report disclosed on July 14, local time, showed that JPMorgan Chase’s net profit in the second quarter of 2026 reached US$21.2 billion, a record high, a year-on-year increase of 41%; the total management revenue in the second quarter reached US$58 billion, a year-on-year increase of 27%.
Major Wall Street banks kicked off the second quarter earnings report of U.S. stocks with strong results. Benefiting from the substantial growth in stock trading and investment banking business, the overall performance of Wall Street institutions exceeded market expectations. The financial report disclosed on July 14, local time, showed that JPMorgan Chase’s net profit in the second quarter of 2026 reached US$21.2 billion, a record high, a year-on-year increase of 41%; the total management revenue in the second quarter reached US$58 billion, a year-on-year increase of 27%. Goldman Sachs achieved revenue of US$20.34 billion in the second quarter, setting a new company record, a year-on-year increase of 39%; net profit was US$6.63 billion, a year-on-year increase of 78%. Citigroup and Bank of America achieved revenue of US$24.77 billion and US$31.56 billion respectively in the second quarter; net profits were US$5.8 billion and US$9.1 billion. In addition, on the evening of July 15th, Beijing time, Morgan Stanley released its results. In the second quarter, the company's net revenue hit a record high of US$21.35 billion, a year-on-year increase of 27%. The market forecast was US$19.58 billion; net profit increased by 58% compared with the same period last year, reaching US$5.58 billion. AI craze boosts investment bank revenue This round of AI capital expenditure super cycle is spilling over to the financial market: a series of transaction activities such as AI-related transaction advisory services, data center and power infrastructure construction financing, debt and equity issuance and underwriting, etc. have increased significantly, driving the outstanding performance of Wall Street investment banks. Take SpaceX, which listed on Nasdaq on June 12, as an example. SpaceX set an IPO record with an issuance of US$75 billion. SpaceX’s underwriting rate this time is relatively low at about 0.67%, but the large enough issuance scale still allows the underwriting group to obtain considerable absolute income. Regulatory filings show SpaceX will pay about $500 million in underwriting fees. Among them, as the joint lead underwriters, two investment banks, Goldman Sachs and Morgan Stanley, each received 20% of the underwriting fee, approximately US$100 million. Moreover, in addition to underwriting fees, a larger amount of income comes from "soft dollars" - that is, after institutional investors obtain IPO stock placement, they return part of their income to the underwriters through subsequent transaction commissions. The amount of "soft dollar" repatriation is usually much higher than the actual transaction execution cost, and the lead underwriter is often the biggest beneficiary. "Although IPO underwriting fees are no longer the main part of investment banking revenue, even in the United States, this part of the business is still the entrance to customer relationships, and its strategic value far exceeds revenue figures. This is why several leading institutions compete to appear in the upper left corner of the home page of large IPO prospectuses." A person in charge of an investment bank at a Chinese securities firm explained to reporters. In SpaceX’s IPO, Goldman Sachs served as the lead underwriter. In the second quarter, Goldman Sachs also served as the main advisor to Alphabet (Google's parent company) for its additional stock issuance, and provided advisory services on Dominion Energy's asset sale to NextEra Energy. The second quarter financial report shows that Goldman Sachs’ investment banking revenue increased by 55% year-on-year to US$3.4 billion, the highest quarterly record since 2021. In addition, Goldman Sachs’ asset and wealth management business management scale exceeded US$4 trillion, a year-on-year increase of 23%, and management fee income reached a new high. JPMorgan Chase’s total investment banking (IB) revenue in the second quarter was US$3.9 billion, a year-on-year increase of 45%, mainly due to the increase in investment banking fees and net income from equity investments. Among them, stock underwriting fees performed particularly strongly, driving investment banking fees to increase by 30% year-on-year to US$3.3 billion, reaching the highest level since 2021. Since the beginning of the year, the company’s global investment banking fee market share is 9.3%, ranking first. At the same time, the assets under management of JPMorgan Chase Asset and Wealth Management (AWM) exceeded US$5 trillion. Morgan Stanley's investment banking revenue increased 58% in the second quarter to $2.437 billion, about $270 million higher than analysts' expectations. This was driven by an increase in merger and acquisition completions, an increase in IPOs and related stock transactions, and an increase in bond issuance. In addition, Bank of America's total investment banking revenue increased by 50% year-on-year to US$2.1 billion, and Citigroup's investment banking revenue increased by 44% year-on-year to US$1.55 billion.
Looking forward to the year ahead, more companies are preparing to join the wave of AI capital expansion. Anthropic and OpenAI have both submitted prospectuses to the U.S. Securities and Exchange Commission. The market expects that the diffusion effect of the AI investment boom will further provide a large number of new opportunities for the capital market. Stock trading business explodes The impact of the AI wave is also reflected in the stock trading business. Against the background of intensified global capital flows, the quarterly revenue of Wall Street institutions far exceeded market expectations. The second quarter report shows that JPMorgan Chase’s stock trading revenue increased significantly by 86% year-on-year to $6.03 billion; Goldman Sachs’ stock trading revenue increased by 72% to $7.416 billion; Morgan Stanley’s stock trading revenue reached $6.3 billion, a year-on-year increase of 69%; Bank of America’s stock trading revenue increased by 70% to $3.6 billion; Citigroup’s stock trading revenue increased by 45% to $2.3 billion. Equity trading revenue for most major banks hit record highs in a single quarter. An important catalyst for the performance explosion was the active performance of the global market in the first half of the year: AI trading spread around the world, and strong market conditions promoted large-scale capital deployment; the S&P 500 Index recorded its best single-quarter return in six years in the second quarter of this year; market fluctuations caused by continued tensions in the Middle East further amplified customers' trading needs and provided generous returns for institutional market-making businesses. Morgan Stanley said in the report that the overall performance of the equity business was strong, and "particularly outstanding in Asia." Jeremy Barnum, chief financial officer of JPMorgan Chase, said on the earnings call: "Large IPOs are emerging one after another, index fluctuations are high, and Asian markets are also extremely active. Many of them are closely related to the theme of artificial intelligence... This is a very, very, very active market environment." Wells Fargo released a research report that the artificial intelligence investment boom "reached a critical point" in the second quarter. The biggest beneficiaries of this trend are Wall Street's three major financial institutions, Goldman Sachs, JPMorgan Chase and Morgan Stanley. Wells Fargo raised its price targets for Goldman Sachs and JPMorgan Chase after reporting strong results on Tuesday. (
Looking forward to the year ahead, more companies are preparing to join the wave of AI capital expansion. Anthropic and OpenAI have both submitted prospectuses to the U.S. Securities and Exchange Commission. The market expects that the diffusion effect of the AI investment boom will further provide a large number of new opportunities for the capital market. Stock trading business explodes The impact of the AI wave is also reflected in the stock trading business. Against the background of intensified global capital flows, the quarterly revenue of Wall Street institutions far exceeded market expectations. The second quarter report shows that JPMorgan Chase’s stock trading revenue increased significantly by 86% year-on-year to $6.03 billion; Goldman Sachs’ stock trading revenue increased by 72% to $7.416 billion; Morgan Stanley’s stock trading revenue reached $6.3 billion, a year-on-year increase of 69%; Bank of America’s stock trading revenue increased by 70% to $3.6 billion; Citigroup’s stock trading revenue increased by 45% to $2.3 billion. Equity trading revenue for most major banks hit record highs in a single quarter. An important catalyst for the performance explosion was the active performance of the global market in the first half of the year: AI trading spread around the world, and strong market conditions promoted large-scale capital deployment; the S&P 500 Index recorded its best single-quarter return in six years in the second quarter of this year; market fluctuations caused by continued tensions in the Middle East further amplified customers' trading needs and provided generous returns for institutional market-making businesses. Morgan Stanley said in the report that the overall performance of the equity business was strong, and "particularly outstanding in Asia." Jeremy Barnum, chief financial officer of JPMorgan Chase, said on the earnings call: "Large IPOs are emerging one after another, index fluctuations are high, and Asian markets are also extremely active. Many of them are closely related to the theme of artificial intelligence... This is a very, very, very active market environment." Wells Fargo released a research report that the artificial intelligence investment boom "reached a critical point" in the second quarter. The biggest beneficiaries of this trend are Wall Street's three major financial institutions, Goldman Sachs, JPMorgan Chase and Morgan Stanley. Wells Fargo raised its price targets for Goldman Sachs and JPMorgan Chase after reporting strong results on Tuesday. (