Wall Street banks book record fees on AI infrastructure boom
Record investment banking fees at Wall Street's largest banks reveal a global AI infrastructure spending surge that is reshaping capital markets, even as top executives warn of hidden risks in power supply and tenant viability.
Goldman Sachs, JPMorgan, and Morgan Stanley have posted their highest investment banking fees in years, driven by a sudden surge in financing for artificial intelligence infrastructure. Goldman booked a record $3.4 billion in fees in the second quarter, up 55 percent from a year earlier. Across the five largest US banks, combined net income reached roughly $49 billion, a 39 percent increase.
Bank leaders attribute the windfall to an "AI CapEx super cycle" that is straining traditional financing markets. David Solomon, Goldman’s chief executive, said the demand spans every financing instrument, region, and industry. The trend is most visible in underwriting, where Goldman’s equity and debt placement fees jumped 130 percent and 75 percent respectively, far outpacing traditional advisory work.
The capital required to build out data centres is staggering. Morgan Stanley’s research forecasts data centre capital expenditure will hit roughly $850 billion this year, rising to $1.3 trillion in 2027 and potentially $1.5 trillion in 2028. Ted Pick, Morgan Stanley’s chief executive, estimated the industry is only 10 to 15 percent through this investment cycle.
For European companies and investors, this American-led boom is already reshaping global capital flows. Massive raises are crossing borders, evidenced by SK hynix pricing a $26.5 billion American depositary receipt offering earlier this month, and the syndication of SoftBank’s $40 billion OpenAI loan. To absorb the volume, financing is shifting into exotic structures, including Meta’s $27.3 billion private placement for a single Louisiana campus and nascent attempts to build futures markets for compute power.
However, the boom is not without friction. JPMorgan’s chief financial officer, Jeremy Barnum, revealed the bank rejected certain data centre deals due to fundamental questions about power supply and tenant occupancy. No major US bank disclosed its exact exposure to AI infrastructure, and Solomon declined to quantify AI's specific contribution to Goldman's record quarter.
Executives are acutely aware the cycle will not rise indefinitely. Pick cautioned about the "known unknown element" of AI, while Solomon noted that despite the record fees, IPO volumes remain around the 10-year average. "Ultimately, you will have a recalibration, a reset, a drawdown, and then a further acceleration," Solomon warned. Jamie Dimon was equally blunt: "It’s getting close to as good as it gets. We just don’t know how long it’s going to last."
