Morgan Stanley tops Q2 estimates as dealmaking, trading revenue hit record highs

Morgan Stanley reported better-than-expected second-quarter earnings on Wednesday, with record revenue driven by a surge in investment banking activity and robust trading performance amid heightened market volatility.

The bank's shares were little changed on Wednesday. The stock has climbed 28.5% so far in 2026.

Morgan Stanley also achieved a long-standing milestone by surpassing $10 trillion in wealth management assets. The growth was supported by stock compensation plans for employees of companies that completed initial public offerings during the quarter.

Morgan Stanley's record revenue in Q2 was driven by a surge in investment banking activity and robust trading performance amid heightened market volatility.

The investment banking revenue increased by 58% year-on-year to $2.44 billion, supported by strong IPO underwriting and merger advisory fees.

Morgan Stanley surpassed $10 trillion in wealth management assets through inflows from stock compensation plans related to IPOs and managing employee stock plans for a majority of the world's largest unicorns.

Morgan Stanley CEO Ted Pick highlighted that financial markets are likely to continue funding significant investments in AI, estimating cumulative AI-related capital expenditure could reach $10 trillion over several years.

While current market conditions are favorable for large banks like Morgan Stanley, potential geopolitical tensions and macroeconomic factors could pose risks in the future.

The bank expects further inflows into its wealth management business, noting that it manages stock plans for 70% of the world's 100 largest unicorns—privately held companies valued at more than $1 billion.

A revival in global dealmaking helped fuel the bank's performance. The total value of announced mergers and acquisitions reached $2.8 trillion during the first half of the year, marking the highest first-half volume since LSEG began tracking the data in 1980.

"More than half of the $148 billion in net new assets came from stock plan IPO flows," said Morgan Stanley CFO Sharon Yeshaya in a phone interview, reported Reuters.

Morgan Stanley's investment banking revenue jumped 58% year-on-year to $2.44 billion, supported by strong IPO underwriting and merger advisory fees.

The bank served as a lead underwriter for Elon Musk's SpaceX blockbuster public listing, which became the largest IPO by market value and signalled a rebound in the US listings market. It also acted as a lead underwriter for AI chipmaker Cerebras' New York IPO and served as joint book-running manager for Alphabet's equity capital raise announced last month.

Among its major advisory assignments, Morgan Stanley advised Fertitta Entertainment on its $17.6 billion agreement to acquire Caesars Entertainment.

Looking ahead, the bank has secured underwriting roles in the anticipated public offerings of artificial intelligence companies Anthropic and OpenAI.