AI Boom Enriches Asset Owners as Workers Fall Behind

Households in the top income quintile held $56.3 trillion in stock and mutual-fund wealth in the second quarter—87% of all household stock and mutual-fund wealth—while JPMorgan Asset Management said lower-earning households are struggling. The bank said capital gains are expected to grow faster than labor income in coming years as the AI boom directs wealth toward asset owners.

Who Holds the Gains

The S&P 500 has risen 70% in five years. JPMorgan expects U.S. large-cap stocks to grow about 7.5% a year and estimates AI could lift U.S. total factor productivity growth to about 1.2% annually in its base case. How those gains will reach lower- and middle-income Americans remains unclear, the bank said.

The report described the K-shaped economy as a split between lower-earning households that are struggling and higher-earning Americans who are doing well. That divide isn't likely to even out soon. Wealth from the post-pandemic AI boom has flowed to asset owners, leaving people without stocks behind. Even higher-earning Americans are showing signs of pulling back on spending amid hotter inflation and high gas prices.

JPMorgan called the unequal returns to capital and labor a “metastable state — surprisingly durable, but sensitive to stress or shock.” It said a miscalculation in the balance between the upper and lower parts of the K was “the greatest risk” to its outlook. Workers could demand more resources than economists expect, the bank warned, destabilizing the broader economic and financial system. It also said efforts to redistribute AI-related capital returns could discourage investment and trigger knock-on effects.

Banks Turn the Boom Into Lending

The five biggest investment banks generated about $67 billion in equities revenue through Sept. 30, $7 billion more than they earned during all of 2025, which was itself a record. Goldman Sachs, JPMorgan Chase and Morgan Stanley together accounted for $52 billion in stock-trading revenue so far this year, nearly 80% of the total.

Rising stock-market values and increased institutional and retail trading in stocks, ETFs and derivatives accompanied the banks’ trading gains. Their prime brokerages extended loans to hedge funds, letting them increase their bets. Bank executives said demand for leverage to invest in AI hardware, hyperscalers and chip suppliers reached new highs. Goldman’s equities financing revenue rose 96% in the third quarter to a record $3.37 billion.

JPMorgan CFO Jeremy Barnum said, “I like your 'insatiable demand for capital' point. That feels about right.” He added, “there is capital being tapped through all kinds of different mechanisms.” Wall Street executives said the activity has turned the Big Three’s equities desks from cyclical, transactional businesses into more durable, high-margin lending engines.

The largest banks have used their scale to capture business that smaller or more specialized banks may decline. Trading executives said multibillion-dollar bets, including leveraged swaps on volatile AI stocks or sector ETFs, can require large balance sheets. The biggest banks, they said, can absorb potential $100 million losses without threatening quarterly results. JPMorgan global head of equities Rachid Alaoui said clients want a dealer offering coverage across products and regions, including during stressed markets and periods of volatility.

Public Rules, Private Risk

Trump administration regulators eased some leverage rules for the largest U.S. banks, giving them more room to expand balance-sheet-intensive businesses such as prime brokerage. Regulators finalized the revised rules in 2025, and banks could adopt them as early as January. The rules eased balance-sheet caps that had treated Treasurys and collateralized prime-brokerage loans like riskier assets.

Stanford University finance professor Darrell Duffie said, “Capital did go down, so you have to say the system is somewhat more levered because of the relaxation in regulations.” He added, “It's not a good idea, but it hasn't gotten dramatically out of whack.” The International Monetary Fund warned that rising leverage, crowded positions and correlated selling by hedge funds could threaten stability; it estimated global hedge-fund assets at $13 trillion. In August, JPMorgan CEO Jamie Dimon said industrywide leverage was “the highest it's ever been.”

The AI investment cycle also carries a risk of “widespread capital misallocation,” JPMorgan said. If the boom doesn't significantly raise U.S. productivity, economic growth could slow. Nebius said demand had lifted AI-computing prices more than expected. Its chief revenue officer, Marc Boroditsky, said Nebius wasn't carrying the kind of debt CoreWeave was, and said the company would sell out its 2027 capacity if it brought it online. Nebius and other neocloud firms are spending billions on Nvidia graphics processing units, data centers and rented computing capacity.

The market has shown signs of strain. Last Friday, the S&P 500 fell 1.1% during a wave of AI selling, while the Cboe Volatility Index rose from below 16 to above 22 in two hours. On Oct. 12, the State Street SPDR S&P 500 ETF Trust recorded its lowest full-day trading volume since 2003. About half of the S&P 500 by market capitalization was scheduled to report earnings between Oct. 28 and Nov. 3, with investors expected to watch capital expenditures, free cash flow and evidence companies are monetizing AI.