Goldman and Morgan Stanley Just Took the Lead in Investment Banking — But “Sell-the-News” Is Still Running the Tape

Goldman Sachs and Morgan Stanley hit the tape at the exact same time Thursday morning, and the message was loud and clear: Wall Street’s deal machine didn’t slow down — it rotated. While earlier in the week JPMorgan’s investment banking line looked softer than expected, both GS and MS showed they were major beneficiaries of improving M&A momentum and healthier underwriting activity into year-end. The market reaction, though, is following the script we’ve seen all week across the money-center group: solid fundamentals, solid prints, and investors still choosing to sell first and ask questions later after big 12-month runs. Morgan Stanley is chopping around, while Goldman is slipping into a “sell-the-news” fade — less about disappointment and more about positioning and profit-taking.

Starting with Goldman Sachs, the quarter was a classic “EPS beat, revenue miss, but the engine room is humming” setup. Goldman printed Q4 EPS of $14.01 versus consensus around $11.67–$11.70, a sizable beat driven by strong performance in its core Global Banking & Markets franchise and some meaningful below-the-line help. Net revenues came in at $13.45B, below estimates around $13.79B (and also flagged as a miss versus some forecasts closer to $14.5B), with the shortfall largely tied to Platform Solutions — the consumer-banking venture Goldman has been shrinking after it failed to scale into a durable profit center. In other words: the market didn’t love the headline revenue miss, but investors also understand that the “platform” drag is increasingly a runoff story, while the institutional franchise is the real driver of valuation.

Goldman’s investment banking performance, however, was the cleanest headline in the report and the most relevant datapoint for the sector’s broader narrative. Investment banking fees rose 25% year-over-year to $2.58B, powered primarily by a sharp rebound in advisory activity as completed M&A volumes increased. M&A advisory revenue jumped 41% to $1.36B, confirming that the deal calendar loosened up late in the year and Goldman remained at the center of it. Relative to earlier read-throughs from JPM, this is important because it suggests the investment banking “pie” didn’t shrink — it shifted — and Goldman was one of the biggest winners in that rotation.

Goldman also delivered a strong markets quarter. Equities trading revenue came in at $4.31B versus expectations around $3.65B, while FICC revenue printed $3.11B versus estimates around $2.95B. That combination matters because it highlights Goldman’s ability to monetize volatility and client activity across multiple products at once — and it provides a nice counterweight against any softness investors might be worried about in underwriting pipelines. Even with the revenue miss headline, the underlying feel of the report was that client engagement remains high and the firm is executing well across trading and banking in a healthier capital markets environment.

One unusual wrinkle in Goldman’s quarter was the impact from the Apple Card transition. The firm disclosed a $2.26B markdown tied to transferring Apple Card loans to held-for-sale and contract termination obligations, but this was paired with a reserve reduction that flowed through credit costs, producing a net benefit in provision for credit losses of $2.12B. That accounting reality helped lift earnings power in the quarter and also underscores a broader theme for Goldman: it’s still cleaning up consumer-banking experiments that didn’t fit the franchise, and markets will likely reward continued simplification even if the unwind creates periodic noise in reported revenue.

Goldman also leaned into shareholder returns and profitability targets, raising its quarterly dividend to $4.50/share from $4.00 and reiterating through-the-cycle goals of mid-teens returns and an efficiency ratio around 60%. ROE was reported at 16% for the quarter, a strong number that reinforces why the stock has been such a monster over the past year (+~63%). That’s also why the reaction function is tricky today: Goldman can beat on earnings and still sell off simply because the stock has already been pricing in “everything goes right” for months.

Morgan Stanley’s quarter was cleaner from a headline perspective, delivering a more traditional beat on both EPS and revenue while showing strength across wealth management and investment banking. MS reported Q4 EPS of $2.68 versus expectations around $2.43–$2.44 and revenue of $17.9B versus consensus around $17.7B–$17.77B. Net income rose to $4.4B from $3.7B a year ago, and investors got exactly what they come to Morgan Stanley for: steady wealth-driven growth plus cyclical upside from capital markets activity.

The wealth management engine remains Morgan Stanley’s defining differentiator, and it showed up in the quarter in a big way. Wealth management revenue came in at $8.43B versus $8.34B expected, and full-year wealth revenue hit a record $31.8B. Total client assets across wealth and investment management climbed to $9.3T, supported by more than $350B in net new assets in 2025 — with Q4 net new assets of $122.3B, more than doubling from the year-ago period. That’s a powerful reminder that Morgan Stanley is effectively running a hybrid model: a higher-quality, more annuity-like wealth franchise layered on top of an investment bank that can still rip when deal activity improves.

In Institutional Securities, Morgan Stanley reported net revenues of $7.9B versus $7.3B a year ago, with investment banking standing out as the biggest swing factor. Investment banking revenue surged 47% to $2.41B (up from $1.64B), driven by stronger advisory results and higher equity and debt underwriting activity tied to increased event-related issuance. That’s the key “compare and contrast” point against JPM, BAC, and Citi: MS had the strongest percentage growth print of the group on IB momentum, and it reinforces the idea that the late-year deal cycle reaccelerated — but not uniformly across every franchise.

Trading at Morgan Stanley was also solid but more mixed than Goldman’s. Equities trading revenue came in at $3.67B versus $3.55B expected, helped by strong client activity and higher financing revenue from prime brokerage balances. Fixed income trading revenue declined 9% year-over-year, largely due to weaker commodities and FX, where volatility and structured activity weren’t as supportive. In short: Goldman looked more dominant across markets, while Morgan looked more dominant in wealth and still excellent in advisory.

Now to the key sector comparison: investment banking fees relative to JPM, Bank of America, and Citi. JPM reported investment banking revenue down 2% year-over-year, which stood out as a rare soft spot in an otherwise strong JPM quarter. Bank of America posted modest improvement (up ~1%), with some softness in certain advisory and underwriting categories but still better than feared. Citi, notably, looked strong on investment banking and has been viewed as one of the relative bright spots this season even though the stock still rolled over with the group. Put simply, GS (+25% IB fees) and MS (+47% IB revenue) clearly outperformed JPM and BAC on the investment banking line this quarter, and they at least matched the spirit of Citi’s stronger-than-expected investment banking performance.

The reason this matters is that investment banking results tend to be the “animal spirits” indicator for the sector: it tells you whether corporate confidence is rising, pipelines are opening, and CEOs are getting comfortable doing transactions again. On that score, GS and MS looked like the best pure-play read-throughs that dealmaking is finally accelerating — exactly the opposite of what the market inferred from JPM’s more subdued commentary earlier in the week.

So why is Goldman down and Morgan just chopping around despite strong results? It comes back to setup and valuation gravity. Goldman is up more than 60% over the last year, Morgan is up nearly 40%, and the entire bank complex has had a strong run into earnings. With the fundamentals holding up, the sell-the-news trade increasingly looks less like “something is wrong” and more like “locking gains while you can.” The open question for the rest of the day is whether that profit-taking fades and dip buyers step in — and the bull case for dip buying is straightforward: capital markets activity is improving, trading is delivering, credit is not imploding, and wealth flows remain healthy. If the tape stays constructive and yields don’t spike, buyers are likely to view weakness in high-quality franchises like GS and MS as opportunity rather than warning.

Bottom line: Goldman’s quarter showcased elite trading and a strong rebound in advisory-driven banking, while Morgan’s quarter reinforced the power of its wealth management machine while also posting a blowout investment banking print. Against the broader peer set — JPM, BAC, and Citi — both GS and MS were the clear winners on investment banking momentum in Q4. Whether stocks can hold the gains today will depend less on the numbers (which were strong) and more on whether investors are done taking profits after a huge 12-month move — and history says that if fundamentals stay firm, dip buying eventually tends to show up right after the sellers run out of shares.