Expectations of Rising Rates and Worries About AI Have Investors Piling Into Big Bank Stocks

* Global bank stocks surge on rising rate expectations and AI bubble concerns. * Strong trading, deal activity, and AI financing boost bank profits. * Banks seen as safer alternative to AI investments amid volatility. Bank stocks in the U.S., Canada, Japan, and Europe have surged as investors rotate capital into the sector. The Invesco KBW Bank ETF (KBWB) hit record highs and is up 14% YTD, outpacing the S&P 500. Canadian bank indices rose 25% in 2024. Rising interest rates are widening banks' net interest margins, while strong trading volumes and M&A activity have boosted fee income. Major U.S. banks-JPM, GS, BAC-and Canadian banks-RBC, TD-beat earnings estimates on trading and dealmaking gains. Banks are also benefiting from financing AI data centers. Analysts view banks as a lower-risk alternative to AI stocks, especially if AI enthusiasm fades.