AI stock frenzy drives record revenue at Morgan Stanley, capping big bank earnings blowout
An AI-powered trading and dealmaking binge boosted profits 58% at Morgan Stanley (MS) in the second quarter.
On Wednesday, the Wall Street bank reported net income of $5.58 billion, or $3.46 per share. Net revenue soared 27% from the year-ago period to $21.35 billion. Both earnings per share and revenue are record highs for Morgan Stanley.
Quarterly stock trading fees rose 69% from the year ago period to $6.3 billion, also the highest in the firm's history. Its equity underwriting businesses churned out $851 million, a 70% jump year over year and the highest since 2021.
The company exceeded analyst estimates for net income and revenue, capping off a banner week for Wall Street's biggest banks. JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C) all reported earnings that surpassed expectations on Tuesday.
Together, these six big banks earned nearly $55 billion in the second quarter, a 37% jump a year earlier.
Morgan Stanley CEO Ted Pick called the results "exceptional" in a press release statement.
"We continue to accrete capital, giving us incremental flexibility to invest in our core businesses while generating strong returns for shareholders," Pick added.
Morgan Stanley's stock price rose in early Wednesday trading after closing at a record high on Tuesday. Since the beginning of January, the stock has climbed more than 24%, outperforming its rivals.
The AI boom and "the return of geopolitics" are defining 2026 activity, CEO Ted Pick said during a Wednesday call with analysts.
Those two forces have turbocharged a cycle of Wall Street activities. More trading activity by institutions and retail investors is generating record quarters for their equity trading groups. AI-related IPOs, debt raising, big strategic mergers and other deals are throwing off hefty underwriting and advising fees.
Morgan Stanley bagged a leading position taking rocket maker SpaceX (SPCX) public during the quarter. It and rival Goldman Sachs each earned a $100 million cut of the underwriting fee.
The IPO activity helped the bank's wealth management platform shatter expectations by bringing in a record $148 billion in net new assets, compared to $59.2 billion in the year ago quarter. Revenue in that division rose 14% to $8.8 billion.
David Hollerith covers a range of developments throughout the financial sector, from Wall Street to banking and asset management to crypto and fintech. Email him at david.hollerith@yahoofinance.com. Follow him on X at @DsHollers.
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