After making a fortune from the AI frenzy, Wall Street executives are also beginning to warn of an "AI bubble."

Despite the AI boom driving Wall Street banks to record trading and investment banking performance, several executives from major banks warned this week during earnings call meetings about the excessive enthusiasm for the AI industry.

On October 16, according to media reports, Goldman Sachs CEO David Solomon hinted at similarities between the current situation and the internet bubble during Tuesday's earnings call, stating that the bank is aware that the massive investments in AI infrastructure could lead to "a divergence where some companies thrive while others fail." Citigroup CFO Mark Mason more directly pointed out that "it's hard not to think that certain sectors may have bubbles and are overvalued."

These statements came against the backdrop of the banking industry reporting record quarterly results. This quarter, trading activity and trading revenue both reached new highs, partly due to the market excitement brought by AI. According to a report by Jianwen, Goldman Sachs achieved its highest quarterly revenue in history in Q3, while Citigroup saw record revenues across its five major business segments in Q3.

However, despite issuing warnings, major Wall Street banks are still actively deploying AI technology, from Bank of America's virtual assistant Erica to JP Morgan's cost-cutting initiatives. Executives generally believe that AI applications are still in the early stages, and real returns will take time to materialize.

Wall Street Executives Warn of "AI Bubble"

Goldman Sachs CEO David Solomon explicitly mentioned the internet bubble during Tuesday's earnings call, warning that the massive investments in AI infrastructure may face divergence risks.

Goldman Sachs COO John Waldron further stated at a forum in Washington on Wednesday that the U.S. economy's "significant bet" on AI to drive growth is concerning, but he also noted that it is still too early to determine whether there is an AI bubble. "This could have very good outcomes."

Citigroup CFO Mark Mason expressed similar concerns about valuation issues during Tuesday's call. He pointed out that based on current stock valuations and price-to-earnings ratios, it's hard not to think that certain sectors have bubbles and are overvalued.

Market Concerns About AI Bubble Intensify

Investor concerns about an AI stock bubble have significantly increased after a substantial rise this year.

Reports indicate that recent transactions between OpenAI and Nvidia have been criticized by some as "circular investments," with large amounts of capital being poured into a technology that is considered not yet fully validated.

However, Evercore founder Roger Altman stated earlier this week that the internet bubble is not comparable to current AI investments. He noted that unlike the key players of the past, the largest AI investors today are large, powerful, and highly profitable companies like Meta and Amazon He said: "This is a significant difference; the internet bubble actually involved countless companies that never had sustainability." But he also warned that the market cannot "continue to rise indefinitely."

Banks Actively Deploy AI but Emphasize Returns Take Time

Despite concerns about market bubbles, executives from major banks detailed how their companies are utilizing AI technology during earnings calls. Bank of America launched a virtual financial assistant named Erica, while JP Morgan is leveraging AI for greater cost savings.

Troy Rohrbaugh, Co-CEO of Commercial Banking and Investment Banking at JP Morgan, stated on Wednesday that the bank has begun using AI in specific businesses, but he warned that returns will not come quickly or easily.

"We are reaping some benefits while investing, but I believe the real big gains will be realized in the future."

Sharon Yeshaya, Chief Financial Officer of Morgan Stanley, stated during the earnings call on Wednesday, "There are many ways to use this technology, and we are really just scratching the surface of what it can do."