After a week dominated by retail bank earnings, attention now turns to Wall Street's premier investment banks. Goldman Sachs and Morgan Stanley will release their fourth-quarter 2025 results before markets open on Thursday, January 15, providing crucial insight into the health of capital markets, M&A activity, and wealth management.

Goldman Sachs: The M&A Renaissance

Goldman Sachs enters earnings season riding a wave of optimism. Analysts have pushed their fourth-quarter earnings estimates steadily higher, with the consensus now standing at $11.52 per share on revenue of approximately $14.3 billion.

The upward revision in expectations reflects Goldman's dominant position in the mergers and acquisitions advisory business. After years of subdued deal activity, M&A volumes have surged in recent quarters as companies pursue strategic combinations. Goldman's advisory fees are expected to show significant year-over-year improvement.

"Goldman is the primary beneficiary of the M&A renaissance," said Mike Mayo, an analyst at Wells Fargo Securities. "When CEOs want to do transformational deals, they pick up the phone and call Goldman."

The investment bank's trading operations have also delivered strong results. Equity trading revenues have been particularly robust, benefiting from elevated market volatility and strong client activity. Fixed income trading, while more subdued, has held up better than many expected.

Key metrics to watch in Goldman's report include:

  • Investment Banking Revenue: Analysts expect fees from M&A advisory, equity underwriting, and debt issuance to show double-digit growth
  • Trading Revenue: Equity trading has been the star performer, but fixed income trends will be closely watched
  • Asset Management: Goldman has been building its asset management franchise; growth in assets under supervision will be key
  • Expense Management: Compensation costs remain the largest expense; the compensation ratio will signal management's confidence

Morgan Stanley: The Wealth Management Powerhouse

Morgan Stanley approaches earnings from a different angle. While the firm competes directly with Goldman in investment banking and trading, its wealth management division provides a more stable earnings base that has become the envy of the industry.

Analysts expect Morgan Stanley to report earnings growth of approximately 9%, with the bottom line benefiting from both strong capital markets activity and continued growth in wealth management.

"Morgan Stanley has the most balanced business model among the major investment banks," said Steven Chubak of Wolfe Research, who named the stock a top pick heading into earnings. "They have multiple ways to win regardless of market conditions."

The wealth management division, which includes the legacy Morgan Stanley Wealth Management and E*TRADE, has been attracting significant net new assets. The firm's ability to gather assets from high-net-worth and ultra-high-net-worth clients has been a particular bright spot.

Key metrics to watch in Morgan Stanley's report include:

  • Net New Assets: The flow of new money into the wealth management division signals long-term growth potential
  • Wealth Management Margins: The pre-tax margin in wealth management has been expanding; continuation of that trend would be positive
  • Institutional Securities: Investment banking and trading results will be compared against Goldman's numbers
  • Advisory Fees: Morgan Stanley has been gaining share in M&A advisory; the $818 million in advisory fees last quarter suggests strong momentum

The Competitive Landscape

The rivalry between Goldman Sachs and Morgan Stanley has intensified in recent years. Once clearly differentiated—Goldman as the trading and M&A powerhouse, Morgan Stanley as the wealth management leader—the two firms now compete across virtually every business line.

Goldman has been aggressively building its asset management and wealth management capabilities, seeking the stable earnings that have made Morgan Stanley shares attractive to investors. Morgan Stanley, meanwhile, has expanded its institutional securities business, taking share in both advisory and underwriting.

"The lines between these two firms are blurring," observed Brennan Hawken, an analyst at UBS. "They're becoming more similar over time, which is actually healthy competition for both."

One area where the firms diverge is in their exposure to consumer finance. Goldman's consumer banking efforts through Marcus have been largely wound down after years of losses. Morgan Stanley, by contrast, has no significant consumer banking exposure, focusing exclusively on wealth management and institutional clients.

JPMorgan's Earnings Provide Context

JPMorgan Chase's results on Tuesday provide useful context for Thursday's reports. The nation's largest bank reported record investment banking fees, suggesting strong demand for advisory and underwriting services. However, JPMorgan's stock fell 4% despite the beat, as investors focused on elevated expense guidance.

Goldman and Morgan Stanley will likely face similar scrutiny around expenses. Both firms have been investing heavily in technology and talent, and investors will want to see those investments translating into revenue growth.

"The question for all the banks is whether expense growth is justified by revenue opportunities," said Gerard Cassidy of RBC Capital Markets. "So far, the answer has been yes, but management teams need to keep delivering."

Market Implications

Both Goldman Sachs and Morgan Stanley shares have rallied significantly over the past year. Goldman is up more than 55% over twelve months, while Morgan Stanley has gained approximately 40%. This strong performance has pushed valuations to the higher end of historical ranges.

Historically, Morgan Stanley shares tend to perform well on earnings days, averaging a 1% gain and rising after six of the last seven quarterly reports. Goldman's stock has been more volatile around earnings, with larger moves in both directions.

For investors, Thursday's reports will help determine whether the rally in financial stocks has further room to run. Strong results could push both stocks to new highs, while any disappointment could trigger profit-taking after an extended run.

What to Expect Thursday Morning

Both firms will release results before the market opens, with conference calls scheduled for later in the morning. Goldman typically reports first, followed by Morgan Stanley, allowing investors to compare results in real-time.

Beyond the headline numbers, management commentary will be critical. Investors will want to hear about:

  • The M&A pipeline and expectations for deal activity in 2026
  • Trading activity levels in January and early signs for first-quarter performance
  • Capital return plans, including buybacks and dividends
  • Views on the regulatory environment and any potential changes under the current administration

As the final major earnings reports of the bank earnings season, Goldman and Morgan Stanley's results will provide the definitive word on whether Wall Street's best year since the financial crisis can extend into 2026.