- Investment-banking activity rebounded in late 2025, lifting fees at Goldman Sachs (~25%) and Morgan Stanley (~47%) on stronger M&A and underwriting.
- Global investment-banking fees hit about US$103 billion in 2025, the second-best year on record, driven by megadeals and renewed sponsor exits.
- Bankers are looking to an active 2026 pipeline, with potential IPOs like SpaceX, OpenAI and Cerebras and strength in healthcare, industrials and AI.
- Optimism rests on easier rates and improving regulation, but geopolitics, macro volatility and antitrust/IPO scrutiny remain key risks.
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Bank performances in Q4 2025 marked a sharp reversal from recent lows. Goldman Sachs recorded a 25% year-over-year increase in investment banking fees (~US$2.57 billion), with strong contributions from M&A advisory (up ~41%) and equity trading revenues, while Morgan Stanley saw an even larger jump of ~47%, fueled by underwriting and advisory strength. These gains reflect both pent-up demand and macro shifts: falling interest rates, an energized IPO pipeline, and renewed investor risk appetite in megadeals.
Global investment banking fees reached approximately US$103 billion in 2025—making it the second-highest year on record after 2021. A significant portion of gains came from megadeals (>$10 billion), which numbered around 68 globally in 2025. A resurgence in sponsor-led activity—private equity and venture capital looking for exits—is reshaping the deal landscape, offering banks dual-tracked options between IPOs and M&A.
The IPO pipeline appears robust: companies like SpaceX, OpenAI, and Cerebras are reportedly preparing IPO filings in 2026. Sectoral hotspots include healthcare, industrials, AI infrastructure, and perhaps biotech, following solid M&A momentum in pharmaceuticals. Deal pipelines in these sectors are reportedly the strongest in five years for many banks.
Risks are notable. Regulatory uncertainty—especially antitrust in M&A and oversight on IPOs—could dampen activity. Geopolitical tensions and interest rate policy remain wildcards, though many executives seem to expect more rate cuts during 2025–26. Contrasts in bank performance are emerging: Bank of America saw only ~1% growth in deal fees; JPMorgan had fees delayed into 2026 due to tougher comps, even though it remains top globally in volume.
Strategic implications:
- Banks should prioritize sectors with accelerating deal pipelines—AI, industrials, healthcare—and enhance capabilities in IPO advisory to capture high-profile listings.
- Firms with strong sponsor relationships and alternative exit routes (M&A vs IPO) may benefit disproportionately in this cycle.
- Risk management around regulatory, macro, and valuation headwinds is vital; pricing discipline for underwriting and advisory fees will be tested.
Open questions:
- How sustainably will deal valuations hold in the face of interest rate shifts?
- Will regulatory policy (antitrust, IPO rules, cross-border transaction oversight) tighten as activity accelerates?
- Which IPOs will actually hit this year, and at what valuation—especially for speculative names?
- How will bank returns and credit losses look if macroeconomic softness or inflation pressures reemerge?
Supporting Notes
- Goldman Sachs reported a 25% increase in IB fees in Q4 2025, with dealmaking fees rising to ~US$2.57 billion and M&A advisory up ~41% year-over-year.
- Morgan Stanley’s investment banking revenue rose ~47% in Q4 2025; fixed-income underwriting was especially strong.
- Global investment banking fees in 2025 totaled about US$102.9–103 billion, second only to 2021’s record, with M&A fees making up US$41.4 billion.
- IPOs under consideration for 2026 include OpenAI, SpaceX, and AI chipmaker Cerebras; Wells Fargo CEO Charlie Scharf said the deal pipeline is more active than at any point in the last five years.
- Bank of America saw just ~1% increase in investment banking fees in Q4 2025; analysis notes that JPMorgan had some revenue pushed into 2026 due to tougher year-over-year comparisons.
- Regulatory easing (e.g. antitrust) and macro tailwinds like interest rate cuts and strong corporate balance sheets are cited as drivers of renewed deal activity.