Goldman Sachs and Morgan Stanley Report Surging Profits Amid 2025 M&A Surge

Goldman Sachs and Morgan Stanley reported significant profit increases in the final quarter of 2025, with Goldman recording net income of $3.2 billion, a 38% year-over-year rise, while Morgan Stanley posted $2.8 billion in net income, marking a 34% increase. These gains were fueled by a surge in advisory and underwriting fees tied to a record number of corporate transactions. In Q4 alone, Goldman advised on 147 deals valued at over $350 billion, including major cross-border acquisitions in technology and energy sectors. Morgan Stanley led or co-led 132 transactions, with $320 billion in aggregate value, particularly strong in healthcare and infrastructure financing. The acceleration in deal volume reflects a broader shift in corporate strategy as companies seek scale and sector consolidation amid macroeconomic stabilization. Interest rates have stabilized near 4.5% after a two-year tightening cycle, boosting confidence in financing and valuation expectations. Investment banking revenue for both firms rose 41% and 37% respectively, with underwriting fees accounting for 58% of total revenue in Goldman’s case and 53% for Morgan Stanley. Wall Street’s recovery is also supported by increased client activity in equity and debt capital markets, with IPOs in the U.S. and Europe rising 62% from Q3 2025. The uptick is particularly notable in tech and green energy, where new entrants are leveraging favorable regulatory frameworks and investor appetite for sustainable infrastructure. The performance has translated into strong investor returns, with Goldman’s stock rising 12% in January 2026 and Morgan Stanley’s share price increasing 10%. Analysts view the trend as sustainable through 2026, citing continued corporate balance sheet strength and improving global trade dynamics.