Bank CEOs Overestimate AI Surge as Market Signals Slowdown

Quarterly reports from Goldman Sachs, JPMorgan Chase, Citigroup and Wells Fargo showed robust profits but revealed missed targets on bond and currency desk revenues, as higher Treasury yields and a glut of AI-related debt weighed on fixed-income trading. Underwriting fees for equity sales and IPOs have dropped markedly after the high-profile offerings of SpaceX and Alphabet, and the pipeline of mergers, acquisitions and new listings has contracted, with companies like Oura pulling IPO plans and OpenAI shelving its own.

CEOs David Solomon and Jamie Dimon noted that while the seasonally slow fourth quarter may be less pronounced, the broader market volatility and geopolitical pressures could curb AI-driven capital demand. JPMorgan CFO Jeremy Barnum warned that AI financing permeates many loan categories, making banks vulnerable to a shift in sentiment. Citigroup CEO Jane Fraser highlighted consumer activity as a growth driver, but acknowledged that AI spending is inflating inflation and could strain borrowing as interest rates stay elevated. Overall, bank leaders remain cautious, monitoring credit exposure to AI projects amid uncertain economic conditions.