Morgan Stanley Rises on Q3 Earnings Beat and Strong Trading Revenue

Morgan Stanley (NYSE:MS) stock surged 6.38% to $165.25 as of 10:11 AM EDT on Wednesday, October 15, 2025, following a robust third-quarter earnings report that significantly exceeded analyst expectations. The Wall Street bank posted record revenue of $18.22 billion, driven by a 44% surge in investment banking revenue and exceptional performance in equities trading. The company’s earnings per share of $2.80 beat consensus estimates of $2.10 by a substantial margin, reflecting broad-based strength across all business segments and marking one of the strongest quarterly performances in recent years.

Investment Banking Revenue Surges 44% Amid Rebound in Deal Activity

Morgan Stanley’s third-quarter results showcased the bank’s commanding position in a rebounding dealmaking environment. Investment banking revenue climbed 44% year-over-year to $2.11 billion, propelled by major advisory roles including Union Pacific’s $85 billion acquisition of Norfolk Southern, the largest transaction announced globally this year. CFO Sharon Yeshaya noted that the bank’s investment banking pipeline stands at “all-time highs,” suggesting the momentum could continue into 2026 and potentially surpass the record deal volumes seen in 2021.

The wealth management division reached $8.9 trillion in assets under management, approaching the firm’s long-standing $10 trillion target while achieving a pre-tax margin of 30.3%. This performance underscores CEO Ted Pick’s strategic focus on building a more stable, fee-based revenue stream. The segment generated record revenue of $8.23 billion, up 13% from the prior year, while bringing in $81 billion in net new assets during the quarter. The combination of market appreciation and net inflows positions the bank well for sustained wealth management growth.

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Strong Trading Results and Improving Macro Outlook Support Growth

Equities trading emerged as a standout performer, with revenue surging 35% to $4.12 billion, driven by record results in prime brokerage as the S&P 500 gained approximately 8% during the quarter. Fixed income trading revenue rose modestly, while equity underwriting jumped 80% as Morgan Stanley secured joint bookrunner roles on high-profile IPOs including design software maker Figma and Swedish fintech Klarna. The strong trading performance reflects both favorable market conditions and the bank’s sustained investment in its equities business, where it maintained its number one ranking.

Looking ahead, Morgan Stanley’s executives expressed optimism about macroeconomic conditions and the dealmaking environment. The bank’s CFO highlighted improved GDP expectations and lower debt costs for corporate clients, while the Federal Reserve’s rate-cutting cycle supports market activity. With shares up 34.49% year-to-date and trading at a forward P/E of 16.05, analyst price targets range from $122 to $180, with an average of $154.75. The bank’s return on tangible common equity of 23.5% and profit margin of 22.49% demonstrate operating efficiency that should support continued outperformance relative to the broader S&P 500 index.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.