Consumer Strength
JPMorgan and Bank of America spoke to the strength of consumer spending and high consumer credit quality in their respective earnings reports. As we’ve detailed, consumer finances have remained healthy with the current mix of low and stable unemployment amidst rising wages. These factors may allow spending to continue to grow at responsible levels, a dynamic which major financial institutions largely spoke to in their quarterly reports.
As shown below, Bank of America’s earnings report detailed declining net charge-offs in their consumer banking division. Net charge-offs declined 5 basis points from last quarter to a new recent low of 0.81% of assets.1
Source: Bank of America 10/14/26
JPMorgan’s CFO Jeremy Barnum largely echoed Bank of America’s message on the health of the consumer despite inflation and high energy costs, noting, “Fundamentally, the picture is pretty simple. The consumer is currently very healthy, primarily because of a healthy labor market.”2 So goes employment, so goes the consumer, and for now both appear to be remaining healthy.
AI’s Growth Demands Capital
Other financial heavyweights spoke to the increasing demand for capital to fund the growth of data centers and technology-related investments. Goldman Sachs has found itself to be one of the key players in financing the growth of technology companies (both public and private) given its mix of investment banking and advisory operations. Goldman Sachs’ CEO David Solomon offered some perspective on the growing need for capital in the tech sector, noting “Recent studies estimate that the US data center buildout could require north of $10 trillion in investment through 2032, averaging roughly 3.6% of US GDP annually. And our conversations with clients [detail that] demand for compute significantly exceeds supply at the moment, creating opportunities to help develop financing structures to meet that capacity shortfall.”3 Comments like these, detailing the creation of new financing structures to fund unknown payoffs, may sound suspect to investors familiar with capital-intensive growth cycles of the past.
Stay on Top of Market Trends
The Carson Investment Research newsletter offers up-to-date market news, analysis and insights. Subscribe today!
"*" indicates required fields
But Mr. Solomon continued his comments with a note of caution, humility, and awareness of the risks of this growth cycle, which may help ease the fears of those most suspect of the risky underwriting activities, noting, “While we are proud of the privileged position we play in the AI investment cycle, no one knows how the demands for capital and compute will evolve as the broader AI ecosystem matures. That will only become clearer as technology and markets continue to develop. This uncertainty reinforces the importance of remaining vigilant around the types of activity we finance and how we manage risk as we support our clients.”3 In short, Goldman sees the prospects of this capital-intensive growth in technology as potentially lasting for years to come and also acknowledges key risks of underwriting such nascent technology. In my opinion, their perspective offered a balanced take of both the opportunities and risks associated with financing technology infrastructure and captures the essence of markets – the unknown demands compensation.
Major financial companies kicked off the beginning of earnings season this week. Some major financial firms, such as Goldman Sachs, are becoming increasingly linked with technology as that sector is requiring more capital for growth. While some may raise caution with creative financing solutions, others may look at the opportunity to fund a young industry. Meanwhile, consumer-focused activities remain healthy as spending is rising with wages, and charge-offs remain low. In all, the financial heavyweights spoke to a common theme: spending and financing remain robust.
- https://d1io3yog0oux5.cloudfront.net/_75bc50901a7fa12a6cb94e71c86bd2eb/bankofamerica/db/806/10611/presentation/The+Presentation+Materials_3Q26.pdf
- https://finance.yahoo.com/quote/CMC.F/earnings/CMC.F-Q3-2026-earnings_call-686357.html
- https://finance.yahoo.com/quote/GS-PD/earnings/GS-PD-Q3-2026-earnings_call-650784.html
For more content by Blake Anderson, CFA®, Director, Portfolio Management, click here.
9188021.1. – 19OCT26A
