Bank of America warns Q3 investment banking fees to fall 10%+; shares slide

Bank of America, the second-largest US bank by assets, just threw a wet blanket on Wall Street's AI euphoria. On Tuesday, CFO Alastair Borthwick told investors at a financial conference that third-quarter investment banking fees are expected to fall more than 10% year-over-year, a stark reversal from the blockbuster dealmaking that defined the first half of 2024. The admission sent shares sliding in after-hours trading, as the market digested the possibility that the AI-driven boom in capital markets might be hitting turbulence. For a bank that had been riding high on a wave of AI-related M&A and equity issuance, this is not just a number - it is a signal that the party may be winding down faster than expected.

The 10% decline is not a rounding error. Investment banking fees are a high-margin, volatile revenue stream that can swing a bank's quarterly earnings by hundreds of millions of dollars. For Bank of America, which reported $1.56 billion in IB fees in Q2 2024, a 10% drop would shave roughly $150 million off the top line. But the real sting is the message it sends: the AI boom, which has fueled a surge in tech IPOs, secondary offerings, and mega-mergers, may be losing its grip.