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.

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.

Chief Executive Officer Ted Pick said financial markets are likely to continue funding massive investments in artificial intelligence through both equity and debt markets as part of a long-term investment cycle.

While acknowledging that not every AI investment will succeed and that infrastructure challenges such as power shortages could emerge, Pick said the rapid adoption of AI and its productivity benefits are expected to sustain investment momentum. Morgan Stanley estimates cumulative AI-related capital expenditure could eventually reach $10 trillion over the coming years.

For the quarter ended June 30, net income attributable to shareholders rose to $5.58 billion, or $3.46 per share, from $3.54 billion, or $2.13 per share, a year earlier. Analysts surveyed by LSEG had expected earnings of $2.94 per share.

Total net revenue reached a record $21.35 billion, comfortably exceeding analysts' expectations of $19.64 billion.

Morgan Stanley joined JPMorgan Chase, Bank of America and Goldman Sachs in reporting a sharp rebound in investment banking revenue, reflecting the broader recovery in corporate finance activity.

During the post-results conference call, Pick said the bank continues to evaluate acquisition opportunities that could strengthen its market position in selected business lines or geographic regions, though he stressed that the criteria for pursuing a deal remain stringent.

The bank also posted record equities trading revenue of $6.3 billion, up 69% from a year earlier, as clients stepped up trading activity amid volatile markets. Heightened geopolitical tensions, including the US-Iran standoff that pushed oil prices sharply higher during the quarter, contributed to increased market activity.