US Banks Report Strong Earnings, Remain Bullish on AI Prospects

Outlook on AI and Market Confidence

Major US banks gave a largely upbeat outlook on Tuesday, saying they expect the artificial intelligence investment boom to continue despite public pushback against the technology. Goldman Sachs Chairman and CEO David Solomon said he expects the AI boom to persist for the foreseeable future.

JPMorgan Chase and Goldman Sachs were highlighted as banking heavyweights that posted higher third‑quarter profits, crediting solid trading and financial advisory revenues while noting that US consumer health remains intact even amid inflation.

Executives pointed to shifting challenges, including the grinding US‑Iran war that has lifted energy prices and recent rate‑increase moves by the Federal Reserve and other central banks aimed at taming inflation and rising Treasury yields.

Perhaps the biggest medium‑term question for the sector is the durability of the AI boom, which has triggered a growing list of public worries – most recently the fear that dangerous AI rogue agents could harm or even destroy human life. Concerns about job losses from AI and the energy and water demands of massive data centres were also raised.

Bankers acknowledged that these issues resonate but said they see no appreciable impact on the momentum behind the AI buildout.

“No one knows the exact line of travel but at its base, this technology is real,” said Goldman Sachs Chief Executive David Solomon. He added that “lots of things can go wrong and slow it down,” describing the current period as a “very strong technology super cycle.”

JPMorgan Chase’s Chief Financial Officer Jeremy Barnum said the push behind big AI ventures is “very much still in effect,” noting that “the capex is still getting spent,” “the deals still need to get done,” and “people still want access to the market.”

Quarterly Earnings Details

The comments came as JPMorgan reported a six percent increase in profits compared with a year ago, reaching $15.3 billion, which fell short of the $15.85 billion forecast by FactSet analysts. An earnings release cited $658 million in securities‑investment losses and a 12 percent rise in expenses, mainly driven by higher compensation and greater spending on technology and marketing.

After strong second‑quarter growth in markets‑related business, revenue expansion was expected to ease somewhat in the just‑finished July‑September quarter. JPMorgan still recorded a 13 percent rise in markets‑securities‑service revenue, with robust equity‑market earnings offsetting weaker sales in commodity and interest‑rate trading.

Barnum described consumer spending as “sort of robust” despite persistent inflation, but warned that monetary policy decisions remain a watch item. He said, “The consumer is currently very healthy, primarily because of a healthy labor market. But if the central bank needs to cool things off and that involves an aggressive extended rate cycle, almost by definition, that’s going to involve higher unemployment, which will produce weaker consumer credit results.”

At Goldman Sachs, profits for the July‑September period were $5.1 billion, up 33 percent from the year‑ago level but down 20 percent from the second quarter when conditions were especially strong. The firm noted muted activity in fixed income, currency and commodities, where revenues were “essentially unchanged,” while net revenue in equities trading surged 72 percent year‑on‑year. Goldman also recorded higher investment‑banking fees, citing more completed mergers and an elevated level of initial public and secondary equity offerings.

Solomon referenced recent studies that estimate the US data‑center build‑out will require more than $10 trillion in investment through 2032. He called this prospect a key element of what he terms the current “top quartile” market. While acknowledging that not every data‑center project will proceed, he said “there is going to be a lot of financing to do and we’re going to be in the middle of that,” adding that growing financing needs could exert pressure on rates and affect the returns and viability of certain projects. Nevertheless, he stressed, “one thing is clear, there’s a lot of demand for compute at the moment.”

Among other large banks, Citigroup reported a 40 percent jump in profits to $5.2 billion, while Wells Fargo posted a 6.5 percent increase to $6.0 billion.

Stock Market Reaction

In early afternoon trading, JPMorgan shares rose 0.4 percent and Goldman Sachs climbed 0.8 percent. Citigroup fell 3.4 percent and Wells Fargo lost 1.8 percent.