- Goldman Sachs and Morgan Stanley posted strong Q4 and full-year results as investment banking activity rebounded.
- Investment banking fees jumped at both firms, led by a sharp rise in debt underwriting plus improving M&A and IPO pipelines.
- Tailwinds include strong trading and underwriting conditions and a large sponsor overhang of capital and potential portfolio exits.
- Banks see high fee backlogs and better 2026 visibility, though macro and regulatory risks could temper momentum.
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The Q4 2025 earnings reports for Goldman Sachs and Morgan Stanley demonstrate a clear inflection point for the U.S. investment banking sector. Goldman posted $2.58 billion in Q4 IB fees (up 25% YoY) and full-year IB fees of $9.34 billion (up 21%) on revenues of $41.45 billion in its Global Banking & Markets business—both revenues and profits grew strongly.
Meanwhile, Morgan Stanley’s institutional securities segment saw revenues boosted by a ~93% jump in debt underwriting and meaningful contributions from IPOs. The bank’s investment banking revenue rose 47% YoY in Q4, driving its full-year revenue to ~$70.65 billion.
These gains are being powered by multiple interlocking tailwinds: a revival in mergers and acquisitions, rising equity and debt underwriting, volatility boosting trading revenues (especially in equities and derivatives), and sponsor firms sitting on large pools of capital (“dry powder”) eager to deploy. Goldman in particular cited a backlog in investment banking fees at a four-year high, especially in advisory mandates.
Profitability metrics have improved across the board: Goldman’s ROE reached ~16–17%, assets under supervision climbed to a record $3.6 trillion, and equity financing revenues hit record levels. At Morgan Stanley, growth in wealth management, strong IPO activity and institutional deal flow reinforced its margins.
Strategic implications include: competition for deal mandates will intensify (especially among Goldman, Morgan Stanley, and Citigroup which also saw gains); banks may increasingly lean into sponsor clients and portfolio company exits; and risk management around macro-economic, regulatory, and credit conditions will be crucial to sustain momentum. Open questions remain around rate and inflation trajectories in 2026, the capacity of sponsor dry powder to actually be deployed, and how regulatory policy will evolve in key sectors like AI and tech.
Supporting Notes
- Goldman Sachs reported $9.339 billion in investment banking fees for full-year 2025, up 21% compared to 2024.
- Q4 2025 investment banking fees at Goldman were $2.58 billion, up 25% over Q4 2024.
- Goldman’s Global Banking & Markets net revenues were $10.411 billion in Q4 2025, up 22% YoY.
- Equities net revenues at Goldman were $4.306 billion in Q4 2025, up 25% YoY; equities financing rose 42%.
- Morgan Stanley’s investment banking revenue rose ~47% YoY in Q4 2025, enabled by a nearly 93% increase in debt underwriting revenue.
- Morgan Stanley posted full-year revenue of ~$70.65 billion in 2025.
- Goldman’s assets under supervision ended at $3.6 trillion, driven by long-term fee-based inflows of $66 billion and liquidity inflows of $50 billion in Q4.
- Goldman’s investment banking fee backlog increased for the seventh consecutive quarter, reaching a four-year high, especially in advisory.
- Sponsor clients hold ~$1 trillion dry powder and ~US$4 trillion of value in portfolio companies that could be monetized, according to Goldman executives.[0news18]
- Prospects for 2026 appear favorable with strong pipelines for upcoming IPOs, regulatory tailwinds, and improved conditions in AI-linked capital markets.