Goldman Sachs concluded a week of major bank earnings reports on Thursday with results that made Wall Street history. The investment bank was joined by rival Morgan Stanley, which also reported exceptionally strong earnings. This indicates that large banks are once again taking an aggressive stance in the market.
However, not all banks shared in this success. JPMorgan Chase, Bank of America, and Citigroup, which reported earlier in the week, did not perform as well.
Goldman Sachs achieved a profit of $4.6 billion in the final quarter of 2025, representing a 12% increase compared to the same period last year. This growth was driven by record fees from its wealth and asset management divisions, along with robust activity in dealmaking and equity trading. The bank generated $4.3 billion in equities trading revenue during the quarter, approximately $700 million more than analysts polled by Bloomberg had forecasted. This performance set a new Wall Street record and allowed Goldman to regain its position as the leading investment bank for equities trading, a title it had lost to Morgan Stanley in the previous quarter after three years of holding it.
Morgan Stanley, despite losing the top spot in equities trading, reported significant gains. The firm saw a 93% year-over-year increase in revenue from its debt-writing operations. Net revenue for its investment banking unit rose by 47%, benefiting from last year's surge in dealmaking activity.
Both banks expressed optimism for continued activity in 2026. During its earnings call, Goldman Sachs stated that its deal backlog has reached a four-year high as the new year begins, fueled by the artificial intelligence boom and increased movement from private equity firms. "We are not yet in the middle of the potential for a full-on M&A and sponsor cycle," Goldman CEO David Solomon told analysts on Thursday.
Morgan Stanley Chief Financial Officer Sharon Yeshaya echoed this sentiment in an interview with Reuters. "We are seeing an accelerating pipeline in M&A and IPOs," Yeshaya said. "We expect more deals in healthcare, industrials. Sponsors are also increasing activity because they have the dual track alternative now, either selling through an M&A transaction or an IPO."
Goldman Sachs did report one area of weaker performance. Its total revenue for the quarter was $13.4 billion, a 3% decrease from the previous year and below most expectations. The bank attributed this shortfall to a one-time loss related to the transfer of its Apple Card loan portfolio to JPMorgan Chase. With this move, Goldman has officially exited the consumer banking sector as it enters 2026. During the earnings call, Solomon mentioned the firm is now exploring opportunities in prediction markets.