The AI boom is boosting US regional banks as lending activity picks up, with the State Street SPDR S&P Regional Banking ETF (KRE) trading near a record high earlier this week, up 17% year-to-date. Demand for commercial and industrial loans strengthened in the second quarter, with a net 16.1% of banks reporting higher demand from large and midsize companies, according to the Federal Reserve's senior loan officer survey. This is up from 4.8% in the previous quarter. Banks attribute the increased borrowing to investments in plants and equipment, as well as greater financing needs for inventories. Wells Fargo analysts suggest this is a "trickle down effect" from massive capital spending on AI infrastructure, increasing demand for related materials and services.