Strong earnings driven by investment banking and AI
JPMorgan Chase, Goldman Sachs, and Wells Fargo all exceeded expectations in their third-quarter earnings reports, setting a confident tone for the banking sector. The results were driven by strength in investment banking, consumer spending, and AI-driven efficiency gains. JPMorgan also launched a new strategic initiative to invest in U.S. national security industries.
JPMorgan reported a 16% year-over-year increase in earnings, reaching $5.07 per share, with revenue up 9% to $46.43 billion. Consumer banking revenue came in at $19.47 billion, while commercial and investment banking brought in $19.88 billion, both ahead of estimates. Net interest income matched projections at $24.13 billion. CEO Jamie Dimon cited a resilient U.S. economy but warned of ongoing geopolitical and inflation-related uncertainties.
New $1.5 trillion investment initiative
JPMorgan announced a 10-year plan to channel $1.5 trillion in financing into sectors critical to national security. The bank will commit up to $10 billion in direct equity and venture capital across industries like advanced manufacturing, defense, energy resilience, and AI. Dimon highlighted the risks of overreliance on foreign suppliers and called for reduced regulatory hurdles and improved workforce training to boost U.S. competitiveness.
Key investment areas include critical minerals, battery storage, autonomous drones, cybersecurity, and quantum computing. JPMorgan plans to offer advisory services, financing, and direct capital deployment in these sectors. Dimon also noted that JPMorgan is saving roughly $2 billion annually from its $2 billion AI investment, calling it “the tip of the iceberg.”
Goldman Sachs and Wells Fargo also beat
Goldman Sachs posted earnings of $12.25 per share, a 46% increase from the previous year, with revenue up 20% to $15.18 billion. Global banking and markets revenue rose 18% to $10.12 billion, while investment banking fees jumped 42% to $2.66 billion. Asset and wealth management grew 17% to $4.4 billion. Despite strong results, Goldman shares fell 3.7% after briefly reclaiming key technical levels.
Wells Fargo beat expectations with earnings of $1.66 per share and revenue of $21.44 billion. Consumer banking and lending grew 6% to $9.65 billion. CEO Charlie Scharf cited growth in debit and credit card spending and strong auto loan originations. While commercial and investment banking revenue declined slightly, Wells Fargo stock gained 4%, rebounding above its 50-day average.
Analysts remain bullish on bank stocks
Analysts from Evercore ISI and Truist praised the strong summer performance of bank stocks and expect continued momentum. Truist raised earnings forecasts and price targets for JPMorgan and others, citing favorable capital markets and deregulation trends. UBS raised its target for JPMorgan to $350 and Goldman Sachs to $805, highlighting structural improvements and growth in asset management.
