Goldman Sachs & Morgan Stanley See Surge in Q4 2025 Profits Led by Deals & Trading

The fourth quarter of 2025 marked a strong performance for Goldman Sachs and Morgan Stanley, driven by a resurgence in dealmaking, advisory services, and trading revenues. Goldman posted net earnings of $4.62B (12% YoY growth), countering a 3% drop in net revenues partly caused by the sale of its Apple Card business, which also added $0.46 per share to earnings. Investment banking revenues were up 25% thanks to increased advisory and debt underwriting activity, while equities trading posted record income (25% YoY) of $4.3B. However, fixed-income, currencies, and commodities (FICC) segments showed more modest gains.

Morgan Stanley delivered net income of $4.4B (up 18% YoY), with investment banking revenues leaping 47% YoY to ~$2.4B for the quarter. Equity underwriting, fixed-income underwriting, and M&A advisory all contributed substantially; wealth management net revenues similarly grew 13% to $8.4B. These results reflect the benefits of Morgan Stanley’s diversified model in capturing both markets-facing and fee-based streams.

Despite the strong topline in advisory and trading, Goldman’s overall revenue dropped on a YoY basis due to non-core segment exits and one-time gains—both an opportunity and a warning. Meanwhile, rising provisions for certain risk exposures were minimal in Morgan Stanley’s case (credit loss provisions down to $18M from much higher levels YoY). Cost pressures (compensation, regulatory compliance) and potential policy headwinds remain areas to monitor for both firms.

Strategically, both banks are shifting toward return-focused growth—Goldman by retreating from consumer offerings, raising dividends, and emphasizing core markets and advisory; Morgan Stanley by leveraging its wealth management scale, strong institutional securities performance, and capturing fee-based business. The favorable regulatory environment under the Trump administration (faster deal approvals, lighter scrutiny) is cited as a tailwind but also creates uncertainty, especially if policies shift or market volatility rises.

Looking ahead to 2026, both firms expect continued momentum in M&A and capital markets. However, macro risks—interest rate curves, inflation, geopolitical tensions—and whether deal pipelines can sustain current valuations and volume will be central to sustaining these gains. Open questions include: how durable equity underwriting activity will be; how debt markets will respond to interest rate pressures; and how regulatory risk might alter the deal landscape.