Elon Musk

America

Bank

America’s biggest banks have found a new growth engine in <a href="https://www.thestreet.com/crypto/tag/artificial-intelligence" rel="noopener noreferrer nofollow">artificial intelligence</a>. They lend to the tech giants building it, and they use it to cut their own costs.&nbsp;
This week’s third-quarter earnings calls showed how much confidence, and how much caution, sits behind that trade.
A fresh note from <a href="https://www.thestreet.com/crypto/tag/bank-of-america" rel="noopener noreferrer nofollow">Bank of America</a> adds to the unease. It says the AI spending surge is following the path of past investment booms that ended in disappointment.
<a href="https://www.thestreet.com/crypto/retail/elon-musks-ai-shopper-hit-a-wall-at-amazon" rel="noopener noreferrer nofollow">Related: Elon Musk has shopping advice after Amazon blocks his AI</a>
<h2 id="a-spending-wave-bigger-than-the-railroads">A spending wave bigger than the railroads</h2>
BofA investment strategist <a href="https://in.investing.com/news/stock-market-news/can-ai-avoid-the-boomandbust-fate-of-past-capital-cycles-bofa-weighs-in-5636931" rel="noopener noreferrer nofollow">Sebastian Raedler says</a> hyperscalers are now expected to spend $1 trillion over the next 12 months, up from $330 billion in early 2025.&nbsp;
Hyperscalers are the cloud giants that run huge networks of data centers.&nbsp;
That's equal to about&nbsp;3% of U.S. GDP, more than the 2.2% spent during the 1870s railroad boom and the 1.1% during the 1990s tech boom, as per the <a href="https://in.investing.com/news/stock-market-news/can-ai-avoid-the-boomandbust-fate-of-past-capital-cycles-bofa-weighs-in-5636931" rel="noopener noreferrer nofollow">note.</a>
<a href="https://in.investing.com/news/stock-market-news/can-ai-avoid-the-boomandbust-fate-of-past-capital-cycles-bofa-weighs-in-5636931" rel="noopener noreferrer nofollow">Raedler writes</a> that “most major capital cycles of the past have ended in disappointment,” even when the technology delivered.&nbsp;
High early profits pull in too much investment, and the extra capacity then drags prices down.
According to BofA, that pattern is starting to show. Average token prices have fallen about 50% since summer. Tokens are the units of text AI models process and bill for.&nbsp;
Data from Ramp AI shows U.S. business spending on AI has dipped slightly since August, even as token use climbs.
<h3 id="trending-on-thestreet-roundtable">Trending on TheStreet Roundtable:</h3>
<ul>
 <li><a href="https://www.thestreet.com/crypto/markets/blackrock-ceo-warns-one-move-could-sink-u-s-economy" rel="noopener noreferrer nofollow">BlackRock CEO warns one move could sink U.S. economy</a></li>
 <li><a href="https://www.thestreet.com/crypto/markets/deutsche-bank-has-blunt-advice-after-nvidia-linked-stock-sinks-15" rel="noopener noreferrer nofollow">Deutsche Bank has blunt advice after NVIDIA-linked stock sinks 15%</a></li>
 <li><a href="https://www.thestreet.com/crypto/markets/u-s-turns-bitcoin-buyer-for-the-first-time-since-2022" rel="noopener noreferrer nofollow">U.S. turns Bitcoin buyer for the first time since 2022</a></li>
</ul>
<h2 id="bank-chiefs-weigh-the-upside-against-leverage">Bank chiefs weigh the upside against leverage</h2>
Bank leaders are mostly bullish, with some guardrails.&nbsp;
Goldman Sachs CEO <a href="https://www.fool.com/earnings/call-transcripts/2026/10/13/goldman-sachs-gs-q3-2026-earnings-call-transcript/" rel="noopener noreferrer nofollow">David Solomon told analysts</a> the bank is proud of its role in AI financing.&nbsp;
He added that no one knows how demand for capital and computing power will evolve.
Wells Fargo CEO <a href="https://finance.yahoo.com/quote/WFC-PD/earnings/WFC-PD-Q3-2026-earnings_call-650783.html" rel="noopener noreferrer nofollow">Charlie Scharf called the buildout </a>“a complicated macroeconomic force in its own right,” citing heavy leverage across some supply chains.&nbsp;
<a href="https://www.tradingview.com/news/benzinga:3d7e42515094b:0-citigroup-ceo-says-ai-spending-isn-t-slowing-down-despite-higher-interest-rates/" rel="noopener noreferrer nofollow">Citigroup CEO Jane Fraser is less worried</a>. “There’s simply not enough compute,” she said, arguing that higher interest rates won’t slow the buildout.
Citi also reports internal gains. It says it now builds products up to 40% faster, and AI coding tools have cut its tech vendor costs by 30%.
<a href="https://www.bankingdive.com/news/jpmorgan-dimon-ai-agents-bank-customers-liability-transfer/832870/" rel="noopener noreferrer nofollow">JPMorgan Chase CFO Jeremy Barnum</a> said the benefits of AI take time to show up at a bank of JPMorgan’s size, so they aren’t visible in quarterly results yet.

Bank of America warns of a disappointing old pattern

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TheStreet Roundtable

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