Wall Street bonuses on track for big gains
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Wall Street's bankers and traders are set to rake in big increases in year-end bonuses over 2025, say new projections out Tuesday morning.
Why it matters: The AI investment surge has paid off massively on Wall Street, which raced to (for a fee) help hyperscalers, frontier AI firms and other smaller companies issue stock and debt, go public, spin up financing deals, and so on.
- The surge in volatility didn't hurt either — traders benefit when markets move around a lot.
Plus: Beyond the rich getting richer, the beefy paychecks are crucial to New York state and city budgets and overall economy — juicy payouts typically fuel the real estate and restaurant sectors and state budget coffers.
By the numbers: The biggest jumps are for the investment bankers who work on equity sales, trading and underwriting, per the third-quarter projections from compensation consulting firm Johnson Associates.
- This group could see an increase of between 20 and 30% or more in bonuses, compared with what they got in 2025.
Yes, but: At the bottom of the stack is private equity, where bonus growth could be from zero to 7.5%.
- And private credit could see bonuses that are flat or decrease by as much as 7.5%.
- The sector expanded too quickly, sucked in a lot of money and made some questionable loans, says Alan Johnson, the firm's managing director.
- Next year could be worse. "I don't think the hangover is over yet," he says.
How it works: Johnson Associates has been doing this for 25 years and comes up with its closely watched projections by looking at public filings and talking to clients.
The intrigue: This is the third consecutive year that bonuses have been significantly higher than the prior year — and this may be a peak, the report says.
- Geopolitical turmoil, rising inflation, higher interest rates and recent market turmoil might mean reduced bonuses in 2027.
- "The markets and my intuition and everything else going on would say next year is flat to downish. Probably not down a lot, but flat to downish, just because rarely does everything continue to go good all at the same time," Johnson tells Axios.
What to watch: AI-driven job cuts are accelerating in the industry. "There's going to be fewer people" in the next couple of years, he says.
- That might mean fewer bankers, but those who keep their jobs may see even more compensation.
The bottom line: Some people just stay lucky.
