- Goldman Sachs and Morgan Stanley posted double-digit Q4 2025 profit gains as rising equities, stronger trading, and a rebound in M&A and IPO activity lifted results.
- Goldman earned $4.62B ($14.01/share, +12%) and Morgan Stanley earned $4.4B ($2.68/share, +18%), with investment-banking revenue up about 25% and 47% respectively.
- Goldman’s record equity trading and advisory strength helped offset a revenue dip tied to its exit from consumer banking via the Apple Card sale.
- Both banks see a solid 2026 deal pipeline and supportive conditions, though higher valuations leave less room for error amid macro and regulatory risks.
Read More
The fourth quarter of 2025 delivered strong performances from Goldman Sachs and Morgan Stanley, with both firms benefiting from a reinforcing cycle of elevated deal flow, equity market momentum, and favorable regulatory conditions. Goldman’s 12% rise in net earnings to $4.62B (USD), after stripping out Apple Card-related items that dragged on revenues, demonstrates how its advisory and investment banking businesses have powered its earnings recovery. Morgan Stanley’s near 18% net income growth to $4.4B resulted from significant strength in its Institutional Securities division, particularly from debt underwriting and IPOs.
Investment banking fee revenues were a key growth lever. Goldman’s fees rose roughly 25% year-over-year, with its advisory business up ~41%; Morgan Stanley saw ~47% growth in investment banking revenues. These numbers underscore not just a return of deal volume but also favorable deal terms, likely tied to lower interest rates and increased privately funded M&A.
Trading contributed meaningfully: Goldman saw record equity trading revenues (up ~23-25%) and solid fixed income and commodities gains; Morgan Stanley’s equity trading also enjoyed double-digit growth. These trading results, combined with dealmaking, offset weaker performances elsewhere, especially in consumer banking. Goldman’s sale of its Apple Card business (at a discount) underlines its strategic shift away from volatile retail segments.
Valuations and returns are rising: Goldman’s 2025 return on equity hit about 15%, Morgan Stanley’s ~16%; both banks now trade at portions considerably above pre-2008 crisis book multiples (Goldman ~2.7x, Morgan Stanley ~3.1x). While pricing reflects confidence in continued momentum under lighter regulation, it also raises the bar for future performance.
Looking ahead, both banks express optimism for 2026—anticipating robust M&A, IPOs, favorable capital markets, and regulation favorable to financial institutions. However, they must navigate risks: potential rate-cut missteps, economic and geopolitical shocks, regulatory interventions like caps on credit card interest rates, and margin pressures if market conditions shift. The exit from consumer credit for Goldman signals an emphasis on stable, predictable fee income over transactional volatility.
Supporting Notes
- Goldman Sachs net earnings rose 12% YoY in Q4 2025 to $4.62B, or $14.01 per share.
- Morgan Stanley net income climbed to $4.4B or $2.68/share, up from $3.71B or $2.22/share a year ago.
- Goldman’s investment banking fees rose ~25% YoY; Morgan Stanley’s investment banking revenue jumped ~47%.
- Goldman sold its Apple Card business to JPMorgan, exiting consumer banking; this move led to ~3% revenue decline for Goldman in Q4.
- Goldman’s equity trading revenue hit record levels, up ~23-25%; trading revenues from FICC also rose.
- Return on equity for Goldman ~15%; for Morgan Stanley ~16%; both firms trading at book multiples higher than pre-2008 levels.
- Full-year 2025 dealmaking volume (global M&A) reached ~$5.1T, up ~42% from 2024. Goldman advised on ~$1.48T in deals.
- Goldman raised its quarterly dividend to $4.50/share, signaling strong confidence in earnings sustainability.