Stock Traders Ride the Boom in AI to Notch Best Year Since 2005
TL;DR
Wall Street stock traders are having their best revenue year since 2005, driven by a boom in AI stocks. Revenue is up 18% to $94 billion, with bonuses rising 14%, but concerns of an AI bubble persist.
Key Takeaways
- •Stock traders' revenue is expected to reach $94 billion in 2025, an 18% increase from 2024, marking the best year since 2005.
- •Bonuses for equities traders are projected to rise by 14%, the highest in a decade, outpacing fixed-income traders.
- •Prime brokerage divisions are booming, with income forecast to grow 14% to $31.6 billion, fueled by hedge fund activity.
- •Major banks like Morgan Stanley and JPMorgan reported record equities revenue surges of 35% and 33% respectively in Q3.
- •There are growing concerns about an AI stock bubble, with predictions of a potential market correction and a 6% revenue drop in 2026.
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Stock traders across Wall Street are set to turn in their best year for revenue in at least two decades after clients piled into booming AI stocks in recent months.
The industry’s fee pool is expected to reach $94 billion this year, according to data compiled by Crisil Coalition Greenwich. That would be an 18% increase from 2024, the consultancy found.
It’s a stark turnaround from the start of the year, when US stocks were on the brink of a bear market. But the S&P 500 has advanced 35% since its trough in April, when fears that a brewing trade war would spark a recession sent markets into a tailspin.
Since then, American equities have plowed through record after record as investors poured money into artificial intelligence stocks.
“You have a market that has rallied and is making new highs,” David Haldane, Citigroup Inc.’s head of equities trading for Europe, the Middle East and Africa, said in an interview. “We are right in the middle of the Venn diagram where retail, hedge funds and asset managers are all active.”
Revenue from the business is projected to rise 18% year-on-year
The boom in revenue has heightened expectations for outsized bonuses in equities.
Payouts are set to be almost 14% higher than last year, compared with an average increase of just 2.9% for fixed-income traders globally, according to a report from recruitment firm Options Group. This would take equities bonuses to their highest in a decade.
Read more: Equity Traders Seen Grabbing This Year’s Biggest Bonus Hikes
Part of the increase in revenue will come from banks’ prime brokerage divisions, Coalition said. There, income is forecast to increase 14% to $31.6 billion by year-end.
The business, which lends hedge funds cash and securities to help execute their trades, has soared in recent years, mirroring the surge in both the number and size of hedge funds around the world.
“There has been consolidation of share amongst some of the larger players in equities, especially if you are willing to take risk and already have a leading prime services franchise,” said Mollie Devine, Coalition’s head of markets competitor analytics.
Some of the biggest banks across Wall Street have already been crowing about their stock traders’ outperformance this year.
Morgan Stanley’s equities division broke records in the third quarter, when revenue surged 35% to $4.12 billion, while JPMorgan Chase & Co.’s desk saw income climb 33% to $3.33 billion. At Citigroup, prime balances jumped 44% to a record.
“In cash, equities derivatives and prime, the entire ecosystem has been firing on all cylinders,” said Ludovic Peiron, head of equity derivatives sales at JPMorgan. “It was a perfect environment for markets because we had a lot of events where spot level was up, volatility was up and lots of institutional and retail clients tried to position for a rally.”
As the boom in artificial intelligence stocks has sent markets to ever new heights, a growing number of Wall Street executives have grown worried that a bubble is forming that could rival the dot-com craze of the late 1990s that ended in a spectacular crash. JPMorgan Vice Chairman Daniel Pinto warned at a Bloomberg event in Johannesburg on Tuesday that any decline would reverberate across the stock market.
Read more: JPMorgan’s Pinto Warns of Possible ‘Correction’ in AI Valuations
That would be bad news for investors and trading desks alike. Already, Coalition is expecting equity trading revenue to fall 6% in 2026.
“For me these valuations are stretched like they were in the initial 2000 Internet bubble,” Haldane said. “My concern would be that the AI trade is extended and the market sells off.”