Goldman Sachs, JPMorgan and Morgan Stanley are dominating the AI stock boom. Here's their edge — SkimNews
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- Goldman Sachs, JPMorgan, and Morgan Stanley generated a combined $52 billion in equities trading revenue through Sept. 30, seizing nearly 80% of the $67 billion total among the five biggest U.S. investment banks — roughly $7 billion more than the group booked in all of 2025.
- Goldman Sachs equities financing activities jumped 96% in the third quarter to a record $3.37 billion, driven by hedge fund demand for leverage on AI hardware, hyperscalers, and chip suppliers, with JPMorgan and Morgan Stanley reporting similar dynamics.
- Prime brokerage — the business of extending margin loans and securities lending to hedge funds — has become the central battleground, and the Big Three's dominance was accelerated by the retreat of European competitors, including Credit Suisse, from U.S. equities.
- Trump administration regulators finalized relaxed leverage rules in 2025 that banks could adopt as of January, freeing balance-sheet capacity for prime brokerage by no longer treating Treasuries and collateralized prime loans the same as riskier assets.
- South Korea and Taiwan emerged as the fastest-growing equities frontier, as institutional investors poured into memory chipmakers and semiconductor manufacturers — the 'picks and shovels' of the AI data center buildout — across the Big Three's Asian footprints.
- The IMF warned this month that growing leverage, crowded positions, and correlated selling by hedge funds could create stability risks, estimating global hedge fund assets at $13 trillion; JPMorgan CEO Jamie Dimon separately said industrywide leverage was 'the highest it's ever been.'
- Hedge fund blowups last summer including the forced unwinding of Leopold Aschenbrenner's Situational Awareness fund failed to rattle prime brokers, with JPMorgan's equities head saying clients deleveraged and 'the market moved on.'
Why it matters: The biggest U.S. banks now require the kind of balance sheet that can absorb a $100 million single-trade loss, foreclosing the business for smaller rivals and widening the gap with Bank of America and Citigroup. The same regulator-eased leverage rules and record $13 trillion in hedge fund assets that fueled the $52 billion payday also concentrate the downside: if AI cools, the Big Three carry more exposure than peers, and the IMF has already flagged crowded positioning as a stability risk.
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