Goldman Sachs and Morgan Stanley report double-digit profit gains as the stock market rallies. A powerful rebound in equities, combined with a surge in deal activity, delivered a strong finish to the year for Wall Street’s leading investment banks, highlighting renewed confidence across global financial markets.
Strong Earnings Fueled by Market Momentum
Both Goldman Sachs and Morgan Stanley posted impressive profit growth in the fourth quarter, driven by rising asset prices and a busy mergers-and-acquisitions pipeline.
Goldman Sachs reported a 12% increase in net earnings compared with the same period last year, generating $4.62 billion in profit, or $14.01 per share. Morgan Stanley also delivered a notable jump, earning $4.4 billion, or $2.68 per share, up from $3.71 billion, or $2.22 per share, a year earlier.
Deregulation and AI Optimism Lift Wall Street
The broader Wall Street rally has been supported by a regulatory environment viewed as more business-friendly under the Trump administration. Reduced oversight has encouraged corporations to pursue mergers and acquisitions, while investor enthusiasm around artificial intelligence has fueled market optimism.
Companies connected to AI development—and those expected to benefit from widespread adoption of tools such as ChatGPT—have drawn heavy investor interest, pushing valuations higher and increasing trading and advisory activity at major banks.
Investment Banking Fees Surge
Investment banking divisions at both firms saw sharp growth in revenue. Goldman Sachs recorded a 25% year-over-year increase in fourth-quarter investment banking fees, while Morgan Stanley reported a striking 47% jump in the same category.
Executives at both banks noted that their investment fee backlogs rose significantly during the quarter, signaling a healthy pipeline of pending deals that could support earnings well into the new year.
Industry-Wide Gains, With Political Headwinds
The upbeat results were not limited to Goldman and Morgan. Other major lenders, including JPMorgan Chase, Bank of America, and Citigroup, also reported higher fourth-quarter profits.
However, gains across the sector have been partially tempered by ongoing friction between Wall Street and the White House. Concerns persist over the independence of the Federal Reserve and proposals backed by Donald Trump to cap credit card interest rates at 10%, which banks warn could pressure consumer-lending profitability.
Goldman Exits Consumer Banking Experiment
Alongside its strong investment banking performance, Goldman Sachs took a decisive step to streamline its business. The firm agreed to sell its Apple Card credit card portfolio to JPMorgan Chase, effectively ending its short-lived foray into mass-market consumer banking.
The sale, completed at a discount, underscored Goldman’s eagerness to move on from the venture and refocus on its traditional strengths in investment banking, trading, and wealth management.
Outlook Remains Optimistic
With markets buoyant and deal pipelines growing, Wall Street’s biggest players appear well positioned heading into the new year. While political and regulatory uncertainties remain, the latest results suggest that momentum from the stock market rally is providing a solid foundation for continued growth across the investment banking industry.
