Goldman Sachs, JPMorgan Chase and Morgan Stanley have made a combined $52 billion in stock trading revenue this year, nearly 80% of the top five banks' total. Hedge fund borrowing for bets on AI hardware drives much of the growth, while the IMF has warned about rising leverage.
The five biggest investment banks have generated about $67 billion in equities revenue through Sept. 30, according to company filings. That is $7 billion more than the group made during all of 2025, which was itself a record.
Goldman Sachs, JPMorgan Chase and Morgan Stanley made a combined $52 billion of that, nearly 80% of the total.
Hedge fund financing drives the growth
Banks extend loans to hedge funds through their prime brokerages so the funds can amplify their bets. Bank executives said last week that demand for leverage on AI hardware, hyperscalers and chip suppliers had reached new heights.
At Goldman Sachs, equities financing activities jumped 96% in the third quarter to a record $3.37 billion. JPMorgan and Morgan Stanley do not break out that figure but said they saw a similar dynamic.
Size also matters. The biggest banks can absorb potential $100 million losses without threatening their quarters, according to trading executives. Smaller or more niche banks cannot underwrite single-trade risks of that magnitude, so they decline the business or cede share.
Asia's chip supply chain draws institutional money
Trading executives say the fastest-growing frontier for equities this year was Asia. Institutional investors poured into South Korea and Taiwan, targeting memory chipmakers and semiconductor manufacturers, JPMorgan's Rachid Alaoui said.
Still, the revenue figures come with caveats. Trading executives point out that transaction taxes and stamp duties are included in top-line revenue, which inflates Asia prime totals.
Leverage concerns and looser rules
The International Monetary Fund warned this month that growing leverage, crowded positions and correlated selling from hedge funds could create potential stability risks. It estimated that global hedge fund assets had reached $13 trillion.
Regulators also played a part. Trump administration regulators have eased some leverage rules for the largest U.S. banks, and the revised rules were finalized in 2025. Stanford finance professor Darrell Duffie said the system is somewhat more levered because of the relaxation, adding: "It’s not a good idea, but it hasn’t gotten dramatically out of whack."
Source: CNBC
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