Goldman Sachs, JPMorgan and Morgan Stanley Are Dominating the AI Stock Boom — Here’s Their Edge

Goldman Sachs, JPMorgan and Morgan Stanley Are Dominating the AI Stock Boom — Here's Their Edge

The Big Three Capture Nearly 80% of Equities Revenue

Goldman Sachs, JPMorgan Chase and Morgan Stanley have generated a combined $52 billion in stock trading revenue so far this year, nearly 80% of the industry total. Wells Fargo banking analyst Mike Mayo told CNBC that in the AI mega trade the Big Three consider each other their main competitors, and that they are the best positioned to take advantage of this market. Morgan Stanley CEO Ted Pick said on the firm's earnings call: "We're still in a stock-based world. Equities are still, all things being equal, the attractive asset class."

Goldman Financing Surged 96% in One Quarter

Goldman Sachs's equities financing activity jumped 96% in the third quarter to a record $3.37 billion, overtaking equities intermediation of $3.08 billion, which itself rose 52%. JPMorgan and Morgan Stanley do not break out that figure but said they saw a similar dynamic. JPMorgan CFO Jeremy Barnum, responding to analyst questions about financing demand, said: "I like your 'insatiable demand for capital' point. That feels about right. In this moment where AI is such an overwhelming theme … there is capital being tapped through all kinds of different mechanisms."

Hedge Fund Leverage Is the Engine

A key driver is hedge fund leverage. Goldman collected more than $200 million in fees this year from Situational Awareness, an AI hedge fund run by former OpenAI researcher Leopold Aschenbrenner, making it the largest client in Goldman's prime brokerage business; the fund ran four times leverage and was forced to liquidate most of its public equity holdings after the July AI selloff. JPMorgan subsequently stopped lending to the fund, while Goldman, Citigroup and Bank of America continued acting as brokers at that point. JPMorgan CEO Jamie Dimon said in August that industrywide leverage was "the highest it's ever been," though he stopped short of calling the risk big enough to pose a threat to financial markets.

Regulators Eased Balance-Sheet Caps

Another tailwind came from regulators: the Trump administration finalized revisions in 2025 that eased stringent balance-sheet caps treating Treasurys and collateralized prime brokerage loans the same as riskier assets, giving dealers greater flexibility to deploy balance-sheet capital; banks could adopt the new rules as early as January 2026.

AI Infrastructure Financing and Underwriting Add New Fees

The edge extends beyond trading into AI infrastructure financing and underwriting. Goldman CEO David Solomon identified AI infrastructure investment as a significant financing opportunity with substantial capital requirements across data centers, public markets and private credit, while cautioning that escalating financing needs and higher rates could undermine returns on individual projects and emphasizing disciplined underwriting. Morgan Stanley has secured underwriting roles in the expected IPOs of Anthropic and OpenAI. Bloomberg Intelligence analyst Herman Chan expects Anthropic IPO deal flow to lift Goldman Sachs and Morgan Stanley, and notes that banks structure bonds funding data center buildouts, so slower AI spending could cut fee revenue. Goldman's third quarter showed advisory net revenues up 18% to $1.65 billion, equity underwriting up 43% to $666 million, debt underwriting up 15% to $904 million, and profit up 33%.

Hyperscaler Capex Underpins Long-Term Demand

Demand-side numbers are striking: hyperscaler capital expenditure reached roughly $800 billion in 2026, with consensus forecasting $1.1 trillion in 2027 and Goldman's own model projecting $1.2 trillion in 2027 and $1.4 trillion in 2028. Since January 2025, AI infrastructure stocks have seen cumulative earnings estimate increases of 59%, versus just 9% for the S&P 500. JPMorgan's global head of equities Rachid Alaoui told CNBC that for clients the value is not just a price on one trade but coverage and continuity — a dealer offering the full suite across products and regions matters in stressed markets and periods of volatility.

If AI Falls Short, the Risk Reverses

Both CEOs acknowledge the AI buildout is still in its early years, and analysts warn that if AI proves less transformative than hoped, a downturn could hit these banks harder than others. Investors split into two camps on AI valuations: one gives AI firms a pass on margins and capital spending because revenue is growing so fast; the other expects public markets to demand higher margins and proof that spending pays off. Morgan Stanley shares are up about 5.1% in 2026, underperforming the broader market but outperforming Goldman Sachs; its investment management arm reported $1.46 billion in net revenue in the quarter ended September, down from $1.65 billion a year earlier. The market is betting on AI, and the cost and payoff of that bet will ultimately land on these banks' books.