US banks post record $49 billion profit on AI boom and geopolitical volatility

The five largest banks in the United States have reported record profits, driven by an artificial intelligence boom and market volatility triggered by conflict involving Iran.

JPMorgan, Bank of America, Goldman Sachs, Wells Fargo, and Citigroup generated a combined profit of $49 billion in the second quarter, according to data released last week.

SpaceX’s $85 billion initial public offering drew retail investors in waves, generating approximately $500 million for the underwriting banks involved in the transaction.

Market volatility surrounding the repeated opening and closing of the Strait of Hormuz, alongside ongoing debates over whether artificial intelligence represents a brighter future or an existential threat, also boosted bank revenues.

Revenues from significantly higher investment banking fees during a surge in mergers and acquisitions, alongside deals with artificial intelligence companies upgrading their infrastructure, further contributed to the gains.

However, JPMorgan Chase CEO Jamie Dimon tempered expectations during the bank’s earnings announcement.

While praising the “resilience” of the US economy and noting that business conditions were almost “as good as they can get”, Dimon also issued a warning.

“Several risks, including geopolitical tensions and wars, stubborn inflation, large global fiscal deficits, and high asset prices, are shifting beneath the surface like tectonic plates,” Dimon said.

“We cannot predict how these forces will ultimately play out,” Dimon added.

During Goldman Sachs’ earnings call, CEO David Solomon stated that the banking sector is “in the midst of an AI capital expenditure supercycle” driven by investments in artificial intelligence infrastructure.

Further artificial intelligence initial public offerings are also on the horizon. Anthropic’s upcoming listing will be led by Goldman Sachs and Morgan Stanley, while OpenAI has yet to decide which banks will lead its own process.