Banks' trading desks are shattering records. Investors are racing to back artificial intelligence projects. Merger activity is up around the world.

These boom times -- and big paydays -- on Wall Street mean financial firms are contributing more tax revenue for New York state and New York City, home to the most securities industry jobs of any city in the U.S.

A meaningful market downturn, then, would threaten the region's economy, according to an annual securities industry report published by New York State Comptroller Thomas DiNapoli on Tuesday.

"While the industry continues to see strong profits," the report says, "there are growing concerns regarding ongoing geopolitical conflicts, inflation and interest rates, the outsized contributions of the burgeoning AI sector, and the deregulatory push of the current administration."

The comptroller's latest assessment underscores the sheer scale of the fortunes these firms are making as they finance the AI ecosystem and seek to capitalize on geopolitical uncertainty through big bets. Large lenders' core Wall Street businesses -- investment banking and trading -- have propelled their overall earnings in recent quarters.

"Given the increasing contributions to both the City's and State's tax bases, the potential for an industry downturn presents an increasing risk to public finances and the broader regional economy," the report says.

Financial firms have contributed to New York's economy for centuries. Their trading and dealmaking operations are global, but they have a central nervous system there, with firms such as Goldman Sachs, JPMorgan Chase, and Morgan Stanley headquartered in New York City.

The link between the city's and state's finances and Wall Street's success is tightening, the report suggests.

The securities industry generated an estimated $7.8 billion in tax revenue for the city, a record, in its 2026 fiscal year. That was up 15.8% from the prior year, reflecting record-high profits and larger bonuses. The state collected $26.3 billion in tax payments from the industry in its most recent fiscal year, up 28.5%, according to the comptroller's estimates.

Mark Levine, New York City's comptroller, told the City Reporter that New Yorkers "don't realize how our fate has been tied to the AI boom."

"New York City has ridden the AI boom more than anyone in America except San Francisco," he said. "We are financing the data center construction boom; our firms are running the initial public offerings."

Next week, investors will start to hear from the largest U.S. banks, many of which have headquarters or large offices in New York, when they report their third-quarter earnings. Several executives have warned that while overall customer creditworthiness has remained solid, firms' trading results will be more muted than they have been recently.

Still, Wall Street could book a new record this year.

DiNapoli's estimates show the securities industry's profits this year could exceed $90 billion, surpassing last year's record, if the overall growth rate continues through the end of 2026.