Morgan StanleyMicrosoft's stock reached an all-time high of $166.77 on the previous day after its impressive third-quarter 2025 results, which showed strong performance in capital markets. The company's earnings per share of $2.80 increased by 49% compared to the previous year and significantly exceeded the Zacks Consensus Estimate of $2.08.
The capital markets division, which includes advisory, underwriting, and trading activities, has been operating at full capacity since the beginning of the third quarter. As a result, Morgan Stanley's quarterly revenue increase was fueled by historic investment banking fees and robust performance on its trading floor.
Together with strong wealth management, this led to an 18% increase in net revenues compared to the previous year, reaching a new high of $18.22 billion. The total revenue also exceeded the Zacks Consensus Estimate of $16.4 billion.
Morgan Stanley Price, Expectations, and Earnings Per Share Deviation
Morgan Stanley earnings forecast deviation chart | Morgan Stanley Quote
Inside Look at Morgan Stanley's Q3 Capital Markets Operations
Global mergers and acquisitions (M&As) in the third quarter showed a strong recovery from the low levels seen in April and May after President Donald Trump introduced his 'Liberation Day' tariff plans. Businesses swiftly adjusted to the fast-evolving political and economic conditions. They benefited from a robust U.S. economy, hope for possible reductions in Federal Reserve interest rates, and a more favorable regulatory climate under Trump. As a result, Morgan Stanley's investment banking division saw increased activity from a surge in transactions and initial public offerings. Advisory fees increased by 25% compared to the previous year, reaching $684 million as completed M&As grew.
Moreover, increased non-investment grade and investment grade issuances helped boost MS’ fixed income underwriting fees, which rose 39% to $772 million. Furthermore, equity underwriting revenue jumped 80% to $652 million "as clients were actively involved in capital-raising initiatives." As a result, total IB fees (within the Institutional Securities division) climbed 44% to $2.11 billion. We had anticipated it to be $1.54 billion.
Morgan Stanley's strong third-quarter results made waves on Wall Street, with competitors likeJPMorgan JPM and Goldman SachsGS also reported double-digit growth in investment banking fees. JPMorgan's investment banking performance exceeded management's expectations. Total investment banking fees (within the Commercial & Investment Bank segment) increased by 16% compared to the previous year's quarter, reaching $2.63 billion. The company had anticipated investment banking fees to rise in the low double digits.
Goldman continued to lead in total fee collection, reporting $2.66 billion in investment banking revenue, which increased by 42% compared to the previous year in the third quarter. This highlighted the firm's strong position in merger and acquisition advisory and leveraged financing.
Additionally, MS reported strong trading results driven by higher client engagement and market fluctuations. Equity trading revenues rose 35% compared to the previous year, reaching $4.12 billion, while fixed-income trading income increased by 8% to $2.17 billion. Our estimates for equity and fixed-income trading revenues were $3.56 billion and $2.11 billion, respectively. Similarly, JPMorgan and Goldman's trading revenues also saw growth in the third quarter due to uncertainty regarding the effects of tariffs on the U.S. economy and shifts in the Fed's policy approach, which boosted client activity.
Additional Elements That Influenced Morgan Stanley's Third-Quarter Results
In addition to its capital markets activities, Morgan Stanley's wealth and investment management segment performed well, fueled by an increase in client assets and funds under management. Revenue from Wealth Management increased by 13% to $8.23 billion in the third quarter, due to the acquisition of new assets and higher fee collection.
Similarly, the Investment Management division reported net revenues of $1.65 billion, an increase of 13%. Additionally, total client assets in both segments amounted to $8.86 trillion as of September 30, 2025. This moves Morgan Stanley nearer to its long-term objective of reaching $10 trillion in asset management, which was established by former CEO James Gorman.
Moreover, Morgan Stanley's net interest income increased by 13% to $2.49 billion. Additionally, non-interest expenses rose during the quarter. The figure stood at $12.2 billion, representing a 10% increase compared to the same period last year.
Currently, Morgan Stanley has a Zacks Rank of 2 (Buy). You can viewthe full list of today's Zacks #1 Rank (Strong Buy) stocks here.
This piece was first released on Zacks Investment Research (Healthy urvival).