Goldman Outpaces Peers in Q4 Trading; Morgan Stanley Tops $9T in Client Assets — What Lies Ahead

Goldman Sachs’ recent results in Q4 2025 demonstrate a clear resurgence in equities trading, as they posted US$4.31 billion in equity trading revenues—an all-time record for any bank in a single quarter. This came at the expense of rivals like Morgan Stanley, which posted US$3.7 billion for equities trading in the same period. The performance underpins Goldman’s ability to capitalize on volatile market conditions, leveraging strong client activity, prime financing and derivatives.

Morgan Stanley, meanwhile, also had a standout quarter. Beyond equities trading and investment banking revenue growth, the firm crossed a significant milestone by growing total client assets in wealth and investment management to above US$9 trillion. That marks a pivotal moment in its long-term strategy, bringing it nearer to its target of US$10 trillion.

The environment has proven propitious to banking strategies that straddle both cyclical dealmaking activities and more stable fee-based wealth/asset management. Investment banking revenues at MS and Goldman rose sharply—driven by a reactivated IPO pipeline, increased underwriting, and M&A—while trading divisions across major banks benefited from equities market strength. Regulatory easing, especially around capital requirements and tests, added further tailwinds.

However, strategic sustainability is uncertain. Equities trading revenue spikes are volatile by nature; they depend heavily on market volatility, pricing power in derivatives and prime brokerage, and client flows. Wealth management inflows are sticky but face competition, margin compression, and potential regulatory scrutiny—especially in areas like AML and capital rules. Also, if macro conditions weaken (e.g., inflation, interest rates rising, geopolitical risks), both investment banking and trading could see sharp reversals.

Strategically, Goldman and Morgan Stanley appear to be diverging slightly: Goldman leaning more on trading gains and targeting alternative assets growth (setting targets like US$750 billion in alternatives by 2030), while Morgan Stanley is pushing on scale in wealth management and client assets as a stable foundation. Competitive positioning going into 2026 will hinge on risk management, regulatory compliance, cost discipline, innovation, and maintaining deal pipelines.

Open questions include: How long will elevated volatility continue to fuel trading revenues? Will wealth management inflows slow with rising rates or economic uncertainty? How will regulators respond to perceived easing, especially under pressure from political or oversight bodies? And how will margin pressure and cost of funding evolve in trading and prime financing segments?