Wall Street is experiencing a paradox: dealmaking is rebounding strongly, but hiring remains sluggish as banks navigate AI disruption and economic uncertainty. Major investment banks reported impressive second-quarter results, with dealmaking revenues exceeding expectations. Goldman Sachs saw investment banking fees jump 26% with M&A advisory revenue surging over 70%. KPMG’s latest report shows Q2 deal values climbed 22% quarter-over-quarter to $123 billion, while IPOs like Figma’s energized equity capital markets teams.
Apollo CEO Marc Rowan described July as “among the busiest” the private credit giant has ever experienced, with teams working harder than ever. Despite this activity surge, job cuts continue behind the scenes. Goldman Sachs reduced headcount by approximately 2% to 45,900 employees and filed a New York State WARN notice indicating plans to cut an additional 338 NYC-based positions in August. The bank attributes these reductions to annual performance reviews rather than economic conditions.
Barclays eliminated several positions from its Los Angeles financial sponsors team as part of a reorganization, relocating some roles to San Francisco. JPMorgan CFO Jeremy Barnum instructed managers to “resist” hiring and prioritize “efficiency.” Eric Li, head of global banking research at Crisil Coalition Greenwich, expressed surprise at summer layoffs despite strong earnings: “Investment banking numbers actually beat estimates by a long margin, and people are still doing layoffs in July and August. It’s not really rational if you ask me.”
Several factors explain this disconnect. Geopolitical uncertainty from Trump-era tariffs keeps corporates holding cash. The rise of private credit has shifted traditional banking business to alternative asset managers. Most significantly, artificial intelligence is fundamentally changing workforce needs. Chris Connors of Johnson Associates predicts bank headcount will “trend lower” long-term due to AI, stating “I don’t think you’re going to see gangbusters hiring.”
Some selective hiring continues—Jefferies poached senior tech bankers from Guggenheim, while Evercore recruited a top JPMorgan industrials banker. Investment banking recruiter Sophia Samadian notes clients are “moving faster” on “strategic” hires, suggesting cautious momentum. However, the consensus is clear: even if M&A returns to 2021 levels, AI-driven efficiency will permanently reduce hiring needs, making future recruitment highly selective rather than expansive.
Key Quotes
Investment banking numbers actually beat estimates by a long margin, and people are still doing layoffs in July and August. It’s not really rational if you ask me.
Eric Li, head of global banking research at Crisil Coalition Greenwich, expressed surprise at the disconnect between strong financial performance and continued workforce reductions, highlighting how AI and efficiency concerns are overriding traditional hiring patterns.
It is among the busiest Julys we have ever seen in our business.
Apollo CEO Marc Rowan described unprecedented activity levels at the private credit giant, illustrating the strong dealmaking environment that paradoxically coincides with banking sector job cuts.
I don’t think you’re going to see gangbusters hiring. I think it’s going to be strategic hiring.
Chris Connors, principal at Johnson Associates, predicted that AI will permanently dampen hiring even if M&A activity surges, with banks focusing on selective, strategic recruitment rather than broad workforce expansion.
Once they identify the right talent, they’re moving faster than we’ve seen.
Investment banking recruiter Sophia Samadian noted that while banks remain selective, they’re accelerating decisions on strategic hires, suggesting a shift toward quality over quantity in recruitment driven by AI-enhanced productivity expectations.
Our Take
This article captures a pivotal moment in AI’s transformation of professional services. The banking sector’s response—maintaining or reducing headcount despite revenue growth—foreshadows broader white-collar disruption. What’s particularly striking is the speed of this transition: AI tools have matured enough that executives confidently predict permanent workforce reductions even during business expansion. The “strategic hiring” approach reflects a new reality where AI augmentation makes individual employees significantly more productive, reducing overall headcount needs. This isn’t speculative future-gazing; it’s happening now at the industry’s most prestigious firms. The geopolitical uncertainty cited by executives may actually accelerate AI adoption as companies seek controllable efficiency gains amid uncontrollable external volatility. For AI companies, this validates the enterprise value proposition, but raises important questions about workforce transition and economic inequality as high-paying jobs become increasingly scarce.
Why This Matters
This story reveals how artificial intelligence is fundamentally reshaping Wall Street’s employment landscape, even during periods of strong business performance. The disconnect between surging dealmaking revenues and continued layoffs represents a structural shift rather than cyclical downturn. AI-driven automation is enabling banks to handle increased deal volumes with fewer employees, challenging the traditional correlation between business growth and hiring.
For the broader AI industry, this demonstrates how AI adoption is moving beyond tech companies into traditional financial services, with measurable workforce impacts. The emphasis on “efficiency” and “strategic hiring” signals that AI tools are becoming embedded in investment banking workflows, from deal analysis to client management. This trend has significant implications for white-collar employment across industries—if even highly-paid investment bankers face AI-driven displacement during boom times, similar patterns will likely emerge in other professional sectors. The story also highlights how AI adoption accelerates during uncertainty, as companies seek productivity gains to navigate volatile markets, potentially creating a self-reinforcing cycle of technological displacement.
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