Big Wall Street banks have generated about $67 billion in equities revenue through Sept. 30, fueled by the global boom in artificial intelligence stocks, relaxed capital rules and greater lending to hedge funds. That figure is $7 billion more than what the group made during all of 2025, which itself was a record haul.
It is Wall Street’s Big Three that have captured the largest slice of the industry’s most lucrative arena: Goldman Sachs, JPMorgan Chase and Morgan Stanley have made a combined $52 billion in stock trading revenue so far this year, nearly 80% of the total.
“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, told CNBC. “They’ve been best positioned to take advantage of this market.”
Wall Street banks are experiencing an epic run of blockbuster profits as the total value of the stock market balloons and trading activity from institutional and retail investors rises across stocks, exchange-traded funds and derivatives. Helping drive this activity are the loans that the banks, through their prime brokerages, are extending to hedge funds so that they can amplify their bets.
The prime brokerage battleground
Prime brokerage has become a key battleground and source of growth. The Big Three’s prime brokers are central to the larger equities story because they serve the largest funds across markets and products. Demand for leverage to make bets on AI hardware, hyperscalers and chip suppliers has reached new heights, bank executives said last week.
At Goldman Sachs, equities financing activities jumped 96% in the third quarter to a record $3.37 billion. JPMorgan and Morgan Stanley don’t break out that figure, but said they saw a similar dynamic. “I like your ‘insatiable demand for capital’ point. That feels about right,” JPMorgan CFO Jeremy Barnum said on the bank’s third-quarter conference call, responding to analyst questions about financing demands.
“In this moment where AI is such an overwhelming theme … there is capital being tapped through all kinds of different mechanisms,” Barnum said. That demand has helped transform equity desks at the Big Three from cyclical, transactional businesses into more durable, high-margin lending engines, Wall Street executives say.
The performance gap between Wall Street’s giants and rivals including Bank of America and Citigroup highlights a widening divide in capital markets. “For clients, the value isn’t just a price on one trade, it’s coverage and continuity,” Rachid Alaoui, JPMorgan global head of equities, told CNBC in an interview. “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.”
Global expansion and risk management
Executing multibillion-dollar bets, like leveraged swaps on volatile AI stocks or sector ETFs, can require an enormous balance sheet. The biggest banks can absorb potential $100 million losses without threatening their quarters, according to trading executives. Smaller or more niche banks can’t underwrite single-trade risks of that magnitude, forcing them to decline the business or cede share. U.S. prime brokers have also benefited from the retreat of European banks including Credit Suisse from the equities business, said Bloomberg Intelligence analyst Herman Chan.
While U.S. markets were swept up in software and cloud computing giants this year, trading executives say the fastest-growing frontier for equities was in Asia. Institutional investors poured into South Korea and Taiwan, targeting the memory chipmakers and semiconductor manufacturers supporting data center construction, Alaoui said. For the Big Three, with their footprints across Tokyo; Hong Kong; Seoul, South Korea; and Mumbai, India; the Asia trade was a goldmine.
The boom has also drawn some concern over the possible risks posed by hedge funds. The International Monetary Fund warned this month that growing leverage, crowded positions and correlated selling from hedge funds could create potential stability risks, estimating global hedge fund assets had reached $13 trillion. In August, JPMorgan CEO Jamie Dimon said industrywide leverage was “the highest it’s ever been,” though he stopped short of calling the risk big enough to pose a threat to the financial markets.
Another factor driving the equities boom: Trump administration regulators have eased some leverage rules for the largest U.S. banks, giving them more room to expand balance sheet-heavy businesses including prime brokerage. The revised rules were finalized in 2025, and banks were allowed to adopt them as early as January. “Capital did go down, so you have to say the system is somewhat more levered because of the relaxation in regulations,” said Darrell Duffie, a finance professor at Stanford University and a leading expert on financial stability. “It’s not a good idea, but it hasn’t gotten dramatically out of whack.”
