How Goldman, Morgan Stanley & BlackRock Set the Pace After Late-2025 Earnings

As of mid‐January 2026, the results from major Wall Street institutions point to a phase of outsized strength for capital markets, investment banking, wealth management, and asset management, even as some areas remain tempered. Two or three major trends stand out with potential implications for strategy and risk.

1. Dealmaking and trading rebound fueling profits. Goldman Sachs saw investment banking fees rise ~25% in Q4 2025 and equity trading jump similarly, providing upside to earnings despite revenue headwinds from noncore divisions such as consumer banking (e.g. Apple Card transfer). Morgan Stanley’s record performance tracks a 47% increase in investment banking revenue, strong wealth management gains, and client flows that support sustainable asset bases. Market‐wide deal volume (M&A, underwriting, IPOs) is showing momentum, offering positive tailwinds for banks with strong IB franchises.

2. Wealth and asset management as stabilizing engines. Morgan Stanley’s wealth management revenues rose ~13% YoY, contributing significantly to the $70.6B full‐year revenue and pulling up margins; client assets reached ~$9.3T with substantial net new assets. BlackRock added ~$700B in net inflows in 2025, with its AUM surpassing $14T and strong growth in base fees across its ETF and alternative asset franchises. These segments offer more recurring, fee‐based income, which helps smooth volatility from trading swings.

3. Margin pressures, regulatory risk, and cost drag in certain segments. Goldman’s revenue suffered due to the Apple Card sale and platform business losses; BlackRock’s GAAP profits fell ~33% YoY largely due to acquisition‐related and noncash expenses. Regulatory shifts (including oversight of prediction markets, credit card rates, consumer protection) and macro risks—rate trajectories, inflation, geopolitical uncertainty—were noted as caution points.

Strategic implications: Banks with diversified franchises—strong in investment banking, wealth & asset management, trading—are best positioned to capitalize on the current market cycle. Key differentiators will include execution in recurring revenue streams, capital discipline (e.g. ROTCE, CET1 ratios), and adaptability to regulatory/regime changes. Firms heavily exposed to consumer banking or non-core platform businesses may lag or incur one‐off headwinds.

Open questions and risks:

• Can the M&A, IPO, and underwriting momentum sustain into 2026, especially amid rising interest rates and geopolitical uncertainty?
• How will regulatory actions—on credit cards, trading, prediction markets—reshape profit pools and competitive dynamics?
• Is the rate environment beginning to compress wealth‐management margins (e.g. net interest, funding) or inflows, especially if market sentiment weakens?
• How exposed are banks to valuation risks (e.g. mark‐downs in private markets, platform tech liabilities) as part of alternative investments or noncore ventures?