Equities trading in Asia is helping power a record-breaking run from Wall Street's banks, with the region on course to surpass Europe as the industry's second-largest source of revenue behind the US. In the past 12 months, clients of large investment banks have ploughed into companies in Asia that provide critical infrastructure to the AI semiconductor industry, including South Korean SK Hynix, Taiwan's TSMC and China's Cambricon Technologies. "Asia has definitely emerged as one of the big winners in the picks-and-shovels strategy of AI," said Rachid Alaoui, head of global equities at JPMorgan Chase. In the most recent quarter, the largest investment banks collectively reported an unprecedented $25.7bn in earnings from equities trading and called out Asia as a crucial factor in the growth.

Data from the World Federation of Exchanges shows that trading volumes across Asia through to the end of May were more than $52tn, almost matching the $53.5tn in North America. The gains are such that the Asia region could this year overtake Europe in terms of revenues for banks including Goldman Sachs, JPMorgan Chase and Morgan Stanley. While revenues are subject to market conditions, they underscore how trades tied to AI are driving financial markets globally.

Banks have been doubling down on investment in Asia, with Dmitri Potishko, Goldman's global co-head of equities, noting a "material surge and pivot" in the last 18-24 months. Computer-driven quantitative funds and proprietary trading firms such as Jane Street and Citadel Securities are rapidly growing their presence. However, executives remain watchful of geopolitical tensions and correlated risks if the AI trade reverses.