Goldman Sachs vs Morgan Stanley: Q2 2026 Earnings Compared

Same boom, different results: Goldman turned it into more profit

Goldman Sachs and Morgan Stanley brought in almost the same amount of revenue in the second quarter of 2026: $20.34 billion at Goldman and $21.35 billion at Morgan Stanley. Goldman kept more of it. It earned $6.63 billion against Morgan Stanley's $5.58 billion. Its pre-tax margin, the share of revenue left as profit before tax, was 42.1% against 34.4%. Its return on equity was 23.5% against 20.7%. Return on equity (ROE) is the yearly profit a bank makes on each dollar of its shareholders' money.

Both banks were lifted by the same thing: a surge in stock trading and new share sales. The difference comes from what else each one owns. Goldman gets most of its revenue from its trading and dealmaking arm, so the boom went almost straight to profit. Morgan Stanley is weighted more toward managing wealth for individual clients. That business is steadier, but it earns thinner margins, and its growth was slower this quarter.

This comparison uses only the figures in our two published analyses: Goldman Sachs Q2 2026 and Morgan Stanley Q2 2026.

Side by side

Earnings per share (EPS) can't be compared in dollars, because Goldman has about 305 million diluted shares and Morgan Stanley about 1.57 billion. The growth rates can be compared, and both beat net income growth because both banks bought back stock.

What drove Goldman's quarter

Goldman's Global Banking & Markets segment produced $15.52 billion of net revenues, up 53%, and $7.50 billion of pre-tax profit, up 84%. Equities revenue rose 72%. Most of the rise came from prime financing, which means lending cash and securities to hedge funds. The filing ties that business to client balances, and it notes that the S&P 500 rose 15% during the quarter. Investment banking fees rose 55%, led by equity underwriting (helping companies sell new shares), which more than doubled to $985 million. Advisory fees for mergers and acquisitions (M&A) grew only 17%.

Two other things flattered Goldman's growth rate. A year earlier it booked a $384 million charge for expected credit losses on the Apple Card and GM card loans. This year that line was $102 million, and our report estimates the difference is worth about 6 percentage points of the 78% profit growth. In FICC trading, Goldman says the gains partly "reflected the impact of improved market-making conditions on our inventory". In plain terms, bonds and currencies it already held went up in value. That does not mean more client business. Asset & Wealth Management grew 20% to $4.60 billion. Platform Solutions, the consumer-lending business Goldman is winding down, saw revenue fall 64% because of writedowns on the Apple Card loans.

What drove Morgan Stanley's quarter

Institutional Securities, Morgan Stanley's trading and dealmaking division, accounted for $3,397 million of the firm's $4,556 million revenue increase. That is roughly three-quarters of it. Equity trading rose 69% to $6,300 million, and the firm says most of that came from Asia, where its revenues rose 71%. Investment banking rose 58%, and all three parts grew: advisory +57%, equity underwriting +70% and fixed income underwriting +48%.

Wealth Management, the firm's largest steady business, grew revenue 14% to $8,856 million, with a 30.5% pre-tax margin. Part of that slower headline rate comes from an accounting change. A year ago revenue included a $377 million paper gain on investments that fund employee deferred pay. Morgan Stanley now hedges those investments and no longer counts that gain as revenue. On the firm's own adjusted basis, Wealth Management grew 18.6% and total revenue grew 30%. Investment Management grew only 6%, even though its assets rose 17%. The fee it charges on those assets fell to 28 basis points from 31 (a basis point is one-hundredth of a percentage point).

Where they diverge, and why

• Business mix explains much of the margin gap. Morgan Stanley's Institutional Securities earned a 39% pre-tax margin. Its Wealth Management arm earned 30.5%, and part of its costs is a set payout to financial advisors that rises with revenue. Wealth Management is a much bigger share of Morgan Stanley than of Goldman, so the firm's overall margin ends up lower.
• FICC and advisory went opposite ways. Goldman's bond, currency and commodity trading rose 32%. Morgan Stanley's rose 13%, with rates and currencies "relatively unchanged". In M&A advice the order flipped: Morgan Stanley's advisory fees rose 57% and Goldman's rose 17%.
• The prior-year numbers are distorted in opposite directions. Goldman's growth is boosted by a weak 2025 quarter that carried card-loan charges. Morgan Stanley's is held down by the presentation change, which our report says makes its headline growth rate understate the real improvement.
• Capital. Morgan Stanley reports a 14.9% CET1 ratio against a required 11.8%. Goldman's is 12.9%, and it returned capital faster: $4.00 billion of buybacks in the quarter, against $1.5 billion at Morgan Stanley. The CET1 ratio measures a bank's core loss-absorbing capital against its risk-weighted assets. For Morgan Stanley, our report flags a different ratio as the one to watch. Its supplementary leverage ratio (SLR), which measures capital against total assets without adjusting for risk, fell to 4.9% from 5.4% as its balance sheet grew 18% in six months.

Takeaway: Both banks had the same kind of quarter: sharply higher profits driven by equity trading and share issuance, the two lines that swing most with markets. Goldman's higher margin and ROE come from being more concentrated in exactly those businesses. That also means Goldman has more to lose if markets cool. Morgan Stanley's wealth business should cushion a downturn better, but this quarter its fee-based flows actually fell, to $39.1 billion from $42.8 billion.

What to watch next quarter

Goldman Sachs gives no revenue or earnings guidance. Its investment banking backlog, the deals it expects to close, rose from March, with more advisory work and "significantly lower" expected debt underwriting. So the 75% jump in debt underwriting probably won't repeat at the same level. Management expects a full-year tax rate of about 20%, above the 18.5% booked in the first half. More writedowns on the $19.5 billion Apple Card loan book are likely as it moves to another issuer.

Morgan Stanley also gives no guidance. The filing says net new client assets may grow more slowly, because this quarter's $148.1 billion was driven by "large idiosyncratic inflows". Just over half came from clients' company IPOs. It also warns that continued outflows from its equity funds would keep weighing on asset management revenue, and that competition for deposits could squeeze net interest income. The SLR, at 4.9%, is the capital ratio to watch.

For both banks, the real test is a quarter in which stock markets are flat or falling, which this quarter did not provide.