Goldman Sachs, Morgan Stanley Riding High on Dealmaking Wave

Seems like Wall Street saved the best for last.

Goldman Sachs capped off a week of big bank earnings calls with a blockbuster report on Thursday that made Wall Street history. Joining the investment bank was rival Morgan Stanley, which similarly reported gangbuster earnings. Big banks are officially playing offense once again.

Some of them, anyway. JPMorgan Chase, Bank of America and Citi, which reported their quarterly performance earlier in the week, didn’t fare as well.

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Let’s start with Goldman. Profit at the famed investment bank reached $4.6 billion in the final quarter of 2025, up 12% year-over-year, thanks to record fees from its wealth and asset management business as well as a hot streak of dealmaking and equity trading. In fact, Goldman scored $4.3 billion in equities trading revenue in the final quarter — roughly $700 million higher than analysts surveyed by Bloomberg had anticipated. That marked a new Wall Street record. It also meant Goldman reclaimed Wall Street’s crown as the top investment bank for equities trading, a title it had ceded — for the first time in three years — to Morgan Stanley in the previous quarter.

We doubt Morgan Stanley is fretting over the loss too much. The firm reported a staggering 93% year-over-year revenue increase in its debt-writing operations, while net revenue for its investment banking arm jumped 47% as it also rode last year’s dealmaking wave.

The party doesn’t look to end in 2026, either:

• In its earnings call, Goldman said that its deal backlog now sits at a four-year high entering the New Year amid the AI boom and a rush of private equity firms finally veering toward exit ramps. “We are not yet in the middle of the potential for a full-on M&A and sponsor cycle,” CEO David Solomon said during the bank’s call with analysts on Thursday.
• “We are seeing an accelerating pipeline in M&A and IPOs,” Morgan Stanley CFO Sharon Yeshaya said in an interview with Reuters. “We expect more deals in healthcare, industrials. Sponsors are also increasing activity because they have the dual track alternative now, either selling through an M&A transaction or an IPO.”

Falling Far From the Tree: The one rotten apple in Goldman’s earnings basket yesterday? Its total revenue of $13.4 billion, down 3% year-over-year and missing most expectations. But the bank chalked up the whiff to a one-off hit from offloading its Apple Card loan portfolio to JPMorgan. With the move, Goldman officially exits the consumer space as it enters 2026. Still, during the earnings call, Solomon said the firm is exploring opportunities in prediction markets. Translation: We don’t care about running your checking account, and we certainly don’t want to be behind your credit card, but facilitating bets on the Golden Globe for Best Podcast? Sure thing!