Big Bank Earnings Hit Record Highs While IBM Sinks 24%

Wall Street just had its best quarter in years, and it did not invite everyone. $GS posted record revenue up 39%, beating estimates by nearly $4 billion, with equity underwriting up 130% and equities trading raking in $7.4 billion. $C reported its best quarterly revenue in a decade, EPS up 61%, return on tangible equity hitting 13%. $BAC saw equities up 70%, a record for the firm. $JPM printed $6 billion in equity trading versus a $4 billion estimate. These are not good numbers. These are embarrassingly good numbers.

Then there is $IBM, down roughly 24% in a single session after CEO Arvind Krishna literally said, quote, this quarter, we faltered. Software growth came in at 5% versus the expected 10%, infrastructure revenue fell 7%, and a cybersecurity threat called Mythos froze enterprise spending across the board. Chamath Palihapitiya connected the dots on CNBC, warning that IBM's miss is an early signal that enterprise buyers cannot generate ROI from expensive AI implementations. The banks are printing money on capital markets activity. Everyone else is figuring out whether the AI bill was worth paying.

June CPI dropping 0.4% month-over-month, the biggest monthly decline since COVID, gave the market a secondary reason to exhale. But with oil surging on Hormuz tensions and a potential government shutdown on the September calendar, the good vibes from bank earnings have a shelf life. Enjoy the Goldman era while it lasts.