- Goldman Sachs and Morgan Stanley beat Q4 FY2025 profit estimates, with net income up about 12% and 18% year over year, respectively.
- Goldman was driven by roughly 25% gains in equities trading and investment-banking fees, partly offset by a ~3% revenue dip tied to its Apple Card exit.
- Morgan Stanley benefited from a ~47% jump in dealmaking revenue, solid wealth/institutional results, and sharply lower credit-loss provisions.
- Both stocks hit record highs as valuation multiples rose above pre-2008 norms, increasing sensitivity if capital-markets tailwinds fade.
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Financial Performance Comparison
Goldman Sachs posted 12 % year-over-year growth in net income in Q4 2025, delivering $4.62 billion ($14.01 per share), while Morgan Stanley achieved about an 18 % rise to $4.40 billion ($2.68 per share) in the same period. Both profits beat comparable quarter estimates.
Goldman’s equity trading fees jumped ~25 % to $4.3 billion in Q4, with full-year trading up by ~16 %. Investment banking fees surged ~25 % YoY. Its revenue was, however, held back by a ~3 % decline overall (notably from Apple Card exit reducing platform solutions revenue).
Morgan Stanley enjoyed a stronger rebound in investment banking, with its dealmaking revenue up ~47 % YoY in Q4; it also benefited from strong institutional securities and wealth management revenue, and reduced credit loss provisions (from $115 million to $18 million in Q4 YoY).
Valuation, Investor Reaction & Market Context
Stock performance was robust: Goldman shares rose ~4.6 % post-earnings to all-time highs; Morgan Stanley climbed ~5.8 % likewise.
Valuations stretched: both banks are now trading at price-to-book multiples higher than pre-2008 levels—Goldman at ~2.7× book value; Morgan Stanley ~3.1× expected book value. Returns on equity remain solid (Goldman ≈15 %, Morgan Stanley ≈16 %) but well below pre-crisis peaks.
Macroeconomic and regulatory backdrop supportive: strong capital markets / dealmaking environment; lowered regulatory burdens under the current administration; concerns remain around interest rate policy, credit quality, and reliance on volatile investment banking vs stable fee income streams.
Strategic Implications & Risks
Goldman’s exit from consumer credit (Apple Card sale) underscores its strategic re-focus toward higher-margin, less capital-intensive businesses.
Morgan Stanley’s more diversified revenue base (wealth & asset management contributing ~half its revenues) offers buffers against IB / trading cyclicality.
Both banks’ future performance hinges on sustainability of M&A / capital markets momentum, interest rate trajectory, regulatory stability, credit‐loss experiences, and how well they can manage cost pressures and competitive dynamics in trading. Aggressive valuations imply higher risk if tailwinds soften.
Open Questions
- Will the banks sustain elevated dealmaking volumes into 2026, or will the recent spikes reflect a transient catch-up effect?
- How will Goldman’s move away from consumer finance (e.g. Apple Card exit) impact long-term revenue and margin stability?
- Can valuation multiples stay supported if return on equity remains well below pre-2008 norms, particularly if trading / capital markets revenues face headwinds?
- What is the exposure to credit losses, particularly with macro risks (rate hikes, inflation) lurking?
- How will regulatory shifts (on issues like Fed independence, interest rate caps, financial regulation) affect capital requirements and business freedoms?
Supporting Notes
- Goldman Sachs Q4 2025 net income: $4.62 billion or $14.01 per share, up ~12 % YoY.
- Morgan Stanley Q4 2025 net income: $4.40 billion or $2.68 per share, up ~18 % YoY.
- Goldman’s equities trading fees rose ~25 % in Q4; full-year trading up ~16 %.
- Goldman’s investment banking/dealmaking fees in Q4 up ~25 %.
- Morgan Stanley’s dealmaking (IB) revenue jumped ~47 % YoY in Q4.
- Credit loss provisions for Morgan Stanley dropped from ~$115 million a year earlier to ~$18 million in Q4.
- Goldman’s overall revenue declined ~3 % YoY in Q4, largely due to sale of its Apple Card portfolio.
- Goldman raised its quarterly dividend (from $4.00 to $4.50 per share); Morgan Stanley’s stock dividend yield and capital return discipline remain strong.
- Valuations: Goldman trading at ~2.7× book value; Morgan Stanley ~3.1× expected book value—both above windows typical before 2008 crisis.