By Pritam Biswas and Tatiana Bautzer
July 15 (Reuters) – Morgan Stanley beat Wall Street estimates for second-quarter profit on Wednesday, posting record revenue driven by strong deals activity, while market volatility resulted in record trading revenue at the investment bank.
The bank reached its long-time goal of $10 trillion in wealth management assets, helped by the stock plans of employees of companies that completed IPOs in the second quarter. “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.
The bank expects flows to wealth management to grow as it manages 70% of stock plans of the 100 biggest unicorns, private companies valued above $1 billion, Yeshaya added.
Mega-deals helped drive the total value of announced mergers and acquisitions to $2.8 trillion in the first six months of the year, the highest first-half total since LSEG records began in 1980. Morgan Stanley’s investment banking revenue soared 58% to $2.44 billion in the second quarter, boosted by a rise in IPO underwriting and M&A advisory fees.
Morgan Stanley served as a lead underwriter for the record $2 trillion market debut of Elon Musk’s SpaceX, a landmark initial public offering that was a part of the revival of activity in the U.S. listings market.
The investment bank was a lead underwriter on chipmaker Cerebras’ New York IPO and a joint book-running manager on Alphabet’s equity capital raise announced last month. Among the notable deals in the quarter, the bank acted as a financial advisor on Fertitta Entertainment’s agreement to buy Caesars Entertainment in a deal valued at $17.6 billion.
The bank has secured underwriting roles in the expected IPOs of artificial intelligence companies Anthropic and Open AI. CEO Ted Pick said he expects markets to continue to finance high investments in AI through debt and equity transactions, in a multi-year investment cycle.
Pick said there may be instances of unsuccessful investments. “There will be technology and power bottlenecks and constraints, but I think we can agree the market for artificial intelligence and real productivity enhancement is here”. Morgan Stanley estimates the total amount of AI-related capex may reach $10 trillion in many years.
Net income applicable to the investment bank came in at $5.58 billion, or $3.46 per share, in the three months ended June 30, compared with $3.54 billion, or $2.13 per share, a year earlier. Analysts were expecting a profit of $2.94 per share, according to data compiled by LSEG.
Net revenue was a record $21.35 billion, above analyst forecast of $19.64 billion in the second quarter.
JPMorgan Chase, Bank of America and Goldman Sachs reported similar rises in investment banking revenue on Tuesday.
CAUTIOUS, BUT LOOKING AT M&A
Morgan Stanley CEO Ted Pick told analysts on the earnings call that the bank continues to look for potential acquisition targets that could increase its market share in specific areas or geographies, but added that the bar to find a deal is high.
Morgan Stanley posted record equities trading revenue, $6.3 billion, 69% above the quarter a year earlier. Clients increased trading activity as global markets navigated turbulence during the quarter with the U.S.-Iran standoff triggering a sharp rise in oil prices.
Persistently high inflation and shifting monetary policy expectations also injected unpredictability, even though major equity benchmarks demonstrated resilience. A lot of the revenue rise came from trading in Asian markets such as Hong Kong, India, Japan and Korea, the CFO added.
JPMorgan Chase, Bank of America and Goldman Sachs – who also beat quarterly profits on Tuesday – reported a similar jump in trading.
Morgan Stanley shares were volatile during morning trading and were last up 0.4%. The shares have gained 28.5% in 2026, underperforming Goldman Sachs, but outpacing the benchmark S&P 500 index.
KBW analyst Chris McGratty said revenue from investment banking, trading and wealth management beat his projections. The only metric below market expectations was the share buyback volume, $1.5 billion in the quarter, below KBW’s projection of $1.8 billion.
(Reporting by Pritam Biswas in Bengaluru and Tatiana Bautzer in New York; Editing by Arun Koyyur and Nick Zieminski)
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