Goldman Sachs vs. Morgan Stanley — Q3 2026 Compared

Overview

Goldman Sachs and Morgan Stanley both reported Q3 2026 results from their October earnings releases (neither full 10-Q is filed yet). Both are Wall Street's two biggest standalone investment banks, but they lean on different businesses to get there: Goldman on trading and investment banking, Morgan Stanley increasingly on Wealth Management. This quarter shows that split clearly.

At a glance

• Goldman grew revenue and profit faster. Net revenues rose 23.0% to $18.68 billion and diluted EPS rose 38.9% to $17.01. Morgan Stanley's net revenues rose 11.6% to $20.34 billion (still the larger of the two in dollar terms) and EPS rose 8.2% to $3.03.
• The growth came from different places. Nearly all of Goldman's increase traces to one line — Equities financing (lending to hedge funds), up 96% to $3.37 billion. Morgan Stanley's growth was split between trading (equity revenue +41%) and a record $9.07 billion Wealth Management quarter, a steadier, fee-based business Goldman doesn't have at the same scale.
• Both EPS figures are flattered by something that may not repeat. Goldman's EPS growth outran its 29.2% net income growth because of a 4.4% lower share count and roughly $975 million of nine-month tax benefits from employee share awards (Goldman's own release says this added about $3.20 to nine-month EPS). Morgan Stanley's EPS growth was closer to its 6.5% net income growth, and its tax rate actually rose.

Headline figures (both from each company's own earnings release)

What drove each

Goldman's growth is concentrated, and increasingly in one line. Equities revenue rose 72% to $6.44 billion, and within it, Equities financing — essentially lending to hedge funds so they can borrow stock and leverage positions — rose 96% to $3.37 billion. Goldman's own release calls this "now the largest single revenue line in the firm." That line kept growing even as client trading activity (FICC intermediation −7%, Equities intermediation QoQ −26%) slowed from the second quarter's record pace. Two smaller items worked against Goldman this quarter: markdowns on Apple Card loans held for sale (Platform Solutions revenue fell to $170 million) and markdowns on debt investments in the asset-management arm.

Morgan Stanley's growth is broader but weaker. Institutional Securities revenue rose 17.7%, with equity trading up 41% on "strength in Asia" — a similar trading tailwind to Goldman's. But Wealth Management, Morgan Stanley's largest segment, also grew: record revenue of $9.07 billion (+10%), with fee-based client assets up 19% to $3.155 trillion. That diversification is also why Morgan Stanley's growth looks slower: Wealth Management simply doesn't grow 70%+ in a good quarter the way a trading desk can. Working against Morgan Stanley: non-compensation costs rose 20% (execution-related expenses and technology spend), and Investment Management swung to a $106 million loss in performance-based income after reversing carried interest on one private fund — a roughly $223 million year-over-year hit by itself.

Where the EPS numbers diverge from the profit numbers

Both banks' EPS grew faster than, or close to, net income, but for different reasons that matter for how durable the growth is.

• Goldman: net income rose 29.2%, but EPS rose 38.9% — a 9.7-point gap. Part of that is 2.9 million shares bought back this quarter (average price $1,048.73), shrinking the diluted count 4.4% to 301.1 million. The bigger part is timing: Goldman's nine-month tax rate of 20.4% includes about $975 million of tax benefits from employee share awards, which the company says added roughly $3.20 to nine-month EPS, mostly booked in the first half. The third-quarter tax rate alone (24.4%) was close to a year earlier (24.0%), so that tailwind is now mostly behind Goldman rather than still building.
• Morgan Stanley: net income rose 6.5%, EPS rose 8.2% — only a 1.7-point gap. Morgan Stanley bought back $1.54 billion of stock (average $212.74), cutting its diluted count 1.5% and contributing about 1.4 points of the EPS growth. Its tax rate actually rose to 23.3% from 22.8%, a small drag rather than a boost. Morgan Stanley's own disclosure also flags that its reported 11.6% revenue growth understates the comparable figure: a 2025 accounting change moved $206 million of deferred-compensation-hedge gains out of revenue and into compensation expense, so revenue growth on a like-for-like basis was 13.1%, not 11.6%.

Capital: both buffers are narrowing, from different starting points

Goldman's CET1 ratio fell to 12.4% from 12.9% at the end of Q2, as risk-weighted assets grew to $817 billion from $791 billion. Against a regulatory requirement Goldman put at 11.4% last quarter (with a 50–100 basis point management buffer on top), the current buffer is now near the top of that range — meaning continued ~$3 billion-a-quarter buybacks likely need either sustained high earnings or shrinking risk-weighted assets, not spare capital built up earlier. Morgan Stanley's CET1 ratio, at 14.9%, is both higher and nearly flat (down only 0.2 points), but its supplementary leverage ratio — capital against total exposure before any risk-weighting — fell more sharply, to 4.8% from 5.5%, as leverage exposure grew about 23% to roughly $2.04 trillion. Neither bank is capital-constrained today, but both are growing their balance sheets faster than their capital base.

Takeaway: Goldman converted a narrower, trading-concentrated revenue base into much faster EPS growth than Morgan Stanley this quarter, but two of the three things that produced that gap — a hedge-fund financing line that depends on continued high trading/lending activity, and a tax benefit Goldman itself says is now mostly in the rear-view mirror — are less repeatable than Morgan Stanley's steadier, fee-based Wealth Management growth. Morgan Stanley's slower EPS growth, by contrast, came from costs and one-offs (carried-interest reversal, rising non-compensation spend) rather than from financial engineering, which argues for watching Goldman's trading mix next quarter more closely than its headline growth rate suggests.

Figures above are as reported in each company's Q3 2026 earnings release (Form 8-K, Exhibit 99.1); neither company's full Form 10-Q for the quarter had been filed as of this comparison. See the full reports: Goldman Sachs Q3 2026 and Morgan Stanley Q3 2026.