While everyone obsesses over the old news around Nvidia’s next earnings report, I’m focused on a new AI story.
The big banks are among the most underrated and ignored AI trades in the market today.
No one is talking about what’s going on here, yet the charts already seem to have sniffed it out.
And it’s not just a US banking story. The largest banks from around the world are all benefiting from AI these days.
Alfonso has been pounding the table on European Financials, as they’ve been the leaders, breaking out of a massive base earlier this year and never looking back.
And even the Canadian banks have hopped on board with this trend recently.
Our Big 5 Canadian Bank Index is on the verge of breaking out. We covered that group in this morning’s Daily Beat report.
But, back to the United States. Here’s our Big 6 Bank Index, which is making new all-time highs today:
And when you look at the relative trend, the setup is even sweeter.
These money-center banks are reversing trend versus the broader market, telling us to expect even more outperformance from them over longer timeframes.
And that’s a big deal. The truth is that this whole group was dead money for a very long time. Nothing but opportunity cost. The banking industry has been a tough trade for my entire career.
But they aren’t the same battered financial crisis companies of yesterday. These are the mega-cap fintech leaders of the future.
That’s right, these old school banks are leading the way, ushering in a new era of innovation and technology adoption for the financial sector.
JPMorgan is rolling out its own GPT tool, Bank of America’s AI assistant is handling billions of customer interactions, and Goldman’s even using AI to draft IPO docs. That’s not hype—that’s real cost savings, efficiency gains, and new revenue streams.
Just go look at some of the things these guys are doing.
And I think the big banks are also going to embark on buying sprees, gobbling up financial industry disrupters in order to fuel even more growth in the future. Bank deregulations should help boost this trend.
It’s really the same story as the Magnificent Seven and hyperscalers in recent years. The companies with the deepest pockets are the ones that can invest best in this AI gold rush. They will be the most significant and obvious beneficiaries.
US banking is already a “winners-take-most” industry, but it stands to be even more that way in the future. The big boys will get a lot bigger if they win AI.
So if you’re looking for an “AI play” beyond the known chipmakers and software giants, don’t sleep on the banks.
They’ve got the best data, the most customers, and the regulatory muscle to make AI work at scale—something most companies can only dream of.
They also have some of the most bullish technicals in the market to back it all up.
So what’s the trade?
Simple. Just buy the breakouts in these banks. We’ve been doing it via Breakout Multiplier, and it’s been working.
We anticipated the resolution in BAC last week and bought calls. We sold the double on them today and reinvested that capital right back into another one of the big 6 banks.
Tomorrow, we are kicking off our Labor Day sale with 55% off Breakout Multiplier memberships.
I've unlocked the deal for you, so you can get it a day early and take advantage of today’s trade.
The calls we purchased today are still right around our entry price, so you didn’t miss a thing!
