The AI investment boom is creating a broader growth opportunity for regional and big banks beyond direct data center financing. Manufacturers, equipment suppliers and other businesses are increasing borrowing, supporting commercial loan growth.
The State Street SPDR S&P Regional Banking ETFKRE and State Street SPDR S&P Bank ETFKBE both hover around a 52-week high. KRE and KBE have gained about 16.8% and 14.4% year to date, outperforming the broader stock market ETF State Street SPDR S&P 500 ETF TrustSPY (up 13.2%).
After all, AI infrastructure is driving a massive investment cycle, with debt and equity markets helping finance the buildout.
Commercial Loan Demand Strengthens
Commercial and industrial loan demand improved significantly in the second quarter. According to the Federal Reserve's senior loan officer survey, a net 16.1% of banks reported stronger demand from large and midsize companies, up from 4.8% in the previous quarter, as quoted on Yahoo Finance. Higher investment in plants, equipment and inventories drove the pickup in borrowing.
AI Spending Creates Trickle-Down Benefits
AI spending is benefiting industries beyond technology. Wells Fargo analysts called this a "trickle-down effect," with rising demand for electrical equipment, power, natural gas, construction materials and other industrial products.
U.S. manufacturing activity also strengthened. The July ISM manufacturing index reached a four-year high, marking the seventh consecutive month of expansion thanks to an AI infrastructure build-out, as quoted on Yahoo Finance.
Big Tech Relying on Debt & Equity Issuance
Big Tech is increasingly turning to debt markets to finance AI infrastructure. Alphabet, Amazon, Microsoft and Meta are expected to spend more than $730 billion this year, up from about $700 billion previously, per Reuters.
Amazon plans to raise at least $25 billion through U.S. bonds, while NVIDIA announced a $25 billion bond offering. Oracle expects to raise $45-$50 billion through debt and stock in 2026.
Alphabet plans to raise $20-$25 billion through a bond offering, while Meta filed for a bond offering of up to $30 billion in October 2025. Verizon eyed $11 billion through corporate bonds last November. Salesforce priced a $25 billion debt offering in March.
NVIDIA has just partnered with major financial firms like Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to mobilize more than $500 billion in third-party capital for AI compute infrastructure.
Bottom Line
The AI infrastructure boom is creating a broader economic ripple effect that could benefit regional and large banks through stronger commercial lending. A potentially more accommodative Fed following the weak July jobs report could also support bank earnings by improving the interest-rate environment. Against this backdrop, investors can consider ETFs like iShares U.S. Regional Banks ETFIAT and First Trust Nasdaq Bank ETFFTXO.
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