Wall Street Banks Rebound in 2026: M&A & IPO Surge Powers Select Winners

Through 2025, Wall Street’s investment banking landscape saw a marked recovery, with revenues topping $100 billion globally. Market volatility, which had previously suppressed deal flow, instead became a backdrop for activity as clients reengaged for big mergers and public offerings. Institutional investors and banks appear to be operating with renewed confidence, indicating that a structural inflection point may be underway.

Goldman Sachs and Morgan Stanley emerged as primary winners. Goldman reported a 25% year-over-year increase in investment banking fees in the fourth quarter, driven predominantly by M&A advisory and underwriting work. Morgan Stanley’s 47% increase reflects surging demand in debt underwriting and equity offerings. These performances suggest that banks with strong underwriting capacity and advisory franchises aligned to AI, industrials, and healthcare are benefiting most.

Other major banks, including Bank of America and JPMorgan Chase, saw mixed outcomes. Bank of America’s flat fee income reflects limited positioning in mega-M&A or IPO winners. JPMorgan, while still leading in aggregate fees, underperformed expectations on fee growth, with some large-ticket deals deferred into 2026. This signals that deal timing and regulatory environments remain material variables.

Looking forward, deal pipelines remain active. Themes for 2026 include healthcare and industrial sectors, as noted by Morgan Stanley; a relatively more permissive antitrust climate; and expectations of favorable equity market conditions. IPO interest is resurfacing among large private companies, notably OpenAI, SpaceX, and Cerebras. Private equity sponsors face a dual track for exits—via IPO or M&A—as valuation compression eases. These trends suggest a potentially boom-year ahead for banking revenue, subject to macroeconomic risks and regulatory shifts.

Strategic implications:

– Banks should prioritize expanding expertise in high-growth sectors such as AI, industrials, and healthcare, where deal pipelines are strongest. Advisory boutiques may challenge large banks in these niches.
– Capital allocation: firms may need to invest in underwriting capacity, risk management, and regulatory compliance to sustain growth and manage exposure.
– IPO readiness: firms engaged with potential IPOs must focus on pricing power, equity market volatility, and timing, as mega-IPOs could significantly affect market supply and control.

Open questions:
– Can regulatory headwinds, particularly in antitrust and cross-border M&A reviews, remain favorable or at least neutral?
– Will interest rate movements or shifts in central bank policy disrupt underwriting and financing activity?
– How will private equity and venture capital activity respond if valuations tighten or economic growth slows?