As a new administration reshapes the regulatory landscape and artificial intelligence redraws the map of capital, Wall Street's two most storied investment banks have emerged as early beneficiaries of the moment. Goldman Sachs and Morgan Stanley each closed the year with double-digit profit gains, carried forward by a surge in corporate deal-making and investor appetite for the technologies of tomorrow. Yet even as these institutions celebrate, the broader banking world navigates a more complicated terrain — one where political winds and questions of independence may yet test the durability of
Goldman Sachs, Morgan Stanley post double-digit profit gains on deal surge
Goldman was eager to exit the business entirely
Mark
Why did Goldman and Morgan Stanley do so much better than the other big banks, if they all benefited from the same market conditions?
Mimi
They didn't, really—JPMorgan, Bank of America, and Citigroup all posted profit increases too. But Goldman and Morgan's numbers look cleaner because they're not as exposed to consumer banking, where the White House is threatening to cap credit card rates. That's a direct hit to the bottom line.
Mark
So the Apple Card sale—was that a failure, or a smart exit?
Mimi
Both. Goldman lost money on the deal, selling at a discount. But they were hemorrhaging on it anyway. Sometimes the smartest move is to admit you were wrong and get out before it gets worse.
Mark
The deal backlog is growing. Does that mean this boom will last?
Mimi
It suggests momentum will carry into the next quarter, at least. But backlogs are forward-looking—they're promises, not certainties. If the White House follows through on rate caps or if the market cools, those deals could stall.
Mark
What's the real story here—is it the AI boom, or the deregulation?
Mimi
It's both, but deregulation is the permission slip. Companies were already interested in AI. What changed is that they now feel comfortable making big acquisitions to get into the space. Deregulation removed the friction.
Mark
And the Fed independence issue—how much should we worry about that?
Mimi
It's a cloud on the horizon. If the administration successfully pressures the Fed, it could reshape how banks operate. For now, it's just tension. But it's the kind of tension that can turn into real constraints.
Der Puls
- Goldman Sachs and Morgan Stanley posted profits of $4.62B and $4.4B respectively, with investment banking revenues surging as high as 47% — numbers that signal a genuine inflection point, not a routine quarter.
- The Trump administration's deregulatory posture has unleashed a wave of mergers and acquisitions that had been frozen by caution, turning investment banks into the indispensable architects of a reshuffled corporate America.
- The AI boom has added a second engine to the rally, with investors flooding capital toward artificial intelligence ventures and the banks positioned to channel that enthusiasm into deals and public offerings.
- Broader banking giants like JPMorgan and Citigroup also gained, but face a mounting threat: White House pressure to cap credit card rates at 10% and growing tensions over Federal Reserve independence could erode profits elsewhere.
- Goldman's quiet retreat from consumer banking — selling its Apple Card portfolio to JPMorgan at a discount — reveals that even in a season of triumph, strategic miscalculations demand correction and focus.
As a new administration reshapes the regulatory landscape and artificial intelligence redraws the map of capital, Wall Street's two most storied investment banks have emerged as early beneficiaries of the moment. Goldman Sachs and Morgan Stanley each closed the year with double-digit profit gains, carried forward by a surge in corporate deal-making and investor appetite for the technologies of tomorrow. Yet even as these institutions celebrate, the broader banking world navigates a more complicated terrain — one where political winds and questions of independence may yet test the durability of this prosperity.
Wall Street's two largest investment banks closed the year in strong form, with Goldman Sachs reporting $4.62 billion in net earnings — a 12% year-over-year increase — and Morgan Stanley posting $4.4 billion, an 18% jump from the prior year. The results reflect a financial environment transformed by two converging forces: a deregulatory push from the Trump administration that has unlocked a wave of corporate mergers, and an AI-driven investment frenzy that has made capital hungry for exposure to the next technological frontier.
The investment banking divisions told the most vivid part of the story. Goldman's fee revenues in that segment climbed 25% in the fourth quarter, while Morgan Stanley's equivalent division surged 47%. Both banks reported growing backlogs of committed but unclosed deals, suggesting the momentum is not yet spent as the new year begins.
The wider banking sector has shared in the gains — JPMorgan Chase, Bank of America, and Citigroup all reported improved fourth-quarter profits — but the celebration is not unqualified. The administration has floated the idea of capping credit card interest rates at 10%, a move that would strike at a core revenue stream for consumer-facing banks. Tensions over the Federal Reserve's independence have added another layer of uncertainty to an otherwise buoyant moment.
Goldman's decision to sell its Apple Card portfolio to JPMorgan Chase at a discount marked a candid acknowledgment that its foray into consumer banking had fallen short of its ambitions. By shedding that liability, Goldman is sharpening its focus on the investment banking and trading operations that have driven its recent success. Whether the current wave of deal-making can sustain itself against the regulatory headwinds gathering around the broader sector remains the defining question ahead.
Wall Street's two largest investment banks wrapped up the year with handsome profits, riding a wave of deal-making and stock market momentum that has reshaped the financial landscape since the new administration took office. Goldman Sachs reported net earnings of $4.62 billion, a 12% increase from the same quarter a year prior, translating to $14.01 per share. Morgan Stanley, meanwhile, posted $4.4 billion in profit—an 18% jump from its prior-year result of $3.71 billion, or $2.22 per share.
The surge reflects a fundamental shift in how corporations are behaving. The Trump administration's push to roll back financial regulations has opened the door for a wave of mergers and acquisitions. Companies that had been cautious about major deals are now moving forward, and the banks that facilitate these transactions are reaping the rewards. Beyond traditional M&A, the artificial intelligence boom has created another engine of growth. Investors are hungry for exposure to AI companies and the firms positioned to benefit from technologies like ChatGPT, and investment banks have been the gatekeepers for much of that capital flow.
The numbers tell the story most clearly in the investment banking divisions. Goldman's investment fee revenues climbed 25% year-over-year in the fourth quarter. Morgan Stanley's investment banking division saw an even more dramatic 47% jump in revenue. Both firms reported that their backlogs of pending deals—the work already committed but not yet closed—grew substantially in the final quarter, suggesting the momentum will carry into the new year.
The broader banking sector has shared in this windfall. JPMorgan Chase, Bank of America, and Citigroup all reported fourth-quarter profit increases this week. But their celebrations have been tempered by friction with the White House. The Trump administration has signaled interest in capping credit card interest rates at 10%, a move that would compress a major source of banking profits. At the same time, tensions have flared over the Federal Reserve's independence—an issue on which Wall Street and the administration have found themselves at odds.
Goldman Sachs made a strategic retreat from consumer banking last week, agreeing to sell its Apple Card credit card portfolio to JPMorgan Chase. The sale came at a discount, a clear signal that Goldman was eager to exit the business entirely. The Apple Card experiment, which had promised to reshape consumer finance, never gained the traction the bank had hoped for. By offloading the portfolio, Goldman is shedding a liability and refocusing on the investment banking and trading operations where it has found success. The question now is whether the current wave of deal-making and market enthusiasm can sustain itself, or whether the regulatory headwinds facing the broader banking sector will eventually slow the momentum.
Bemerkenswerte Zitate
Both banks reported that their backlogs of pending deals grew substantially in the final quarter— Goldman Sachs and Morgan Stanley fourth-quarter reports
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