October 12, 2026 | Q3 2026 Earnings Preview

The third-quarter earnings season presents a critical test for Wall Street's two leading investment banks as Goldman Sachs Group (GS) and Morgan Stanley (MS) prepare to report results following an extraordinary first half driven by record trading revenue, accelerating mergers and acquisitions activity and robust capital markets demand.

Goldman Sachs reports Tuesday, October 13, followed by Morgan Stanley on Wednesday, October 14, with both companies releasing results before the opening bell.

The fundamental backdrop remains constructive, but the investment debate has shifted. Investors are no longer questioning whether capital markets activity is healthy. Instead, they want to know whether unusually strong trading and investment banking results can be sustained as interest rates rise and dealmaking activity moderates.

According to recent industry estimates, the five largest U.S. investment banks are expected to generate approximately $38 billion in third-quarter trading revenue, down from roughly $47 billion in the second quarter but still approximately 13% higher year over year.

That sequential slowdown creates an important distinction between strong underlying fundamentals and increasingly difficult earnings comparisons.

Goldman Sachs Earnings Preview: Trading Strength Meets Tougher Comparisons

Goldman Sachs (GS) enters its third-quarter earnings report following a record second quarter that demonstrated the strength of its Global Banking & Markets franchise.

The bank reported earnings of $20.98 per share on revenue of $20.34 billion, significantly exceeding analyst expectations.

Equities trading revenue surged 72% year over year to $7.42 billion, while fixed-income, currencies and commodities (FICC) revenue increased 32% to $4.59 billion. Investment banking revenue jumped 55% to approximately $3.4 billion.

Those exceptional results have raised expectations for the Goldman Sachs earnings preview, although analysts anticipate a meaningful sequential slowdown.

GOLDMAN SACHS Q3 CONSENSUS ESTIMATES

Expected EPS

$12.90

+5.3% year over year

Revenue forecast

$16.87B

+11.1% year over year

Barclays Commentary: FICC Weakness and Rising Expenses

At the September Barclays Global Financial Services Conference, Goldman Sachs CEO David Solomon offered a more cautious assessment of third-quarter trading activity.

Solomon indicated that FICC trading had softened relative to the first half, although equities trading remained strong. He also warned that noncompensation expenses would increase by more than $500 million sequentially.

Those comments suggest that even if Goldman delivers another healthy quarter, the combination of softer fixed-income trading and higher operating costs could pressure earnings growth.

Investment banking represents another important variable.

Goldman's second-quarter advisory backlog reached its highest level in five years, reflecting strong corporate demand for strategic transactions. However, Solomon acknowledged that financial sponsor activity remained relatively subdued.

The distinction between announced deals and completed transactions will be particularly important. A substantial advisory backlog provides future revenue visibility, but fees are generally recognized when transactions close.

Key metrics to watch: Equities and FICC trading revenue, advisory fees, debt and equity underwriting, compensation and noncompensation expenses, and management's outlook for fourth-quarter deal activity.

Investors should also monitor Goldman's asset and wealth management business, where management previously projected full-year alternative investment fundraising above $125 billion and materially higher incentive fees during the second half.

Morgan Stanley Earnings Preview: Can Record Institutional Securities Revenue Continue?

Morgan Stanley (MS) enters its third-quarter earnings report with similar capital markets exposure but a somewhat different business mix, supported by its substantial wealth management franchise.

The bank delivered record second-quarter revenue of $21.3 billion and earnings of $3.46 per share, exceeding consensus expectations.

Institutional Securities generated record revenue of $11 billion and pretax profit of $4.3 billion, while investment banking revenue climbed to approximately $2.44 billion from $1.54 billion a year earlier.

Equity underwriting contributed $851 million, fixed-income underwriting reached a record $788 million, and advisory revenue totaled $798 million.

Morgan Stanley also benefited from strong international trading activity, particularly across Asian markets.

MORGAN STANLEY Q3 CONSENSUS ESTIMATES

$2.83

+1.1% year over year

$19.63B

+7.7% year over year

Trading, Underwriting and the Investment Banking Pipeline

Management previously described Morgan Stanley's investment banking outlook as constructive, with healthy transaction pipelines.

However, recent industry data suggests that global equity and debt issuance activity moderated during the third quarter, potentially weighing on underwriting revenue.

Current analyst expectations call for approximately $2.27 billion in investment banking revenue, with equity underwriting fees near $664 million and fixed-income underwriting around $670 million.

Trading will be equally important. Investors should monitor whether the strength in equity financing, prime brokerage and Asian markets can compensate for softer fixed-income activity.

Morgan Stanley's wealth management business provides another potential earnings stabilizer.

Second-quarter wealth management revenue reached a record $8.9 billion, while total client assets across Wealth and Investment Management surpassed $10 trillion.

Management also projected a modest sequential increase in third-quarter net interest income.

Key metrics to watch: Equity trading revenue, fixed-income trading, investment banking fees, advisory pipelines, wealth management inflows, net interest income and operating expenses.

A strong trading performance accompanied by continued wealth management growth could reinforce Morgan Stanley's diversified earnings model.

AI Investment and Capital Markets: A Longer-Term Catalyst

Artificial intelligence infrastructure spending represents another significant opportunity for both investment banks.

Morgan Stanley CEO Ted Pick previously suggested that AI-related capital expenditures could approach $10 trillion over a multiyear investment cycle, with spending requirements extending beyond data centers into energy, infrastructure and financing.

Goldman Sachs has similarly highlighted the opportunities created by large-scale AI investment, particularly in mergers, financing transactions and capital raising.

However, investors should distinguish between announced AI investment commitments and actual investment banking revenue.

The critical question is whether corporate capital spending translates into completed transactions, underwriting fees and sustainable financing opportunities.

Bottom Line: Strong Fundamentals, But Expectations Matter

The Goldman Sachs and Morgan Stanley earnings previews highlight a common challenge: Wall Street's capital markets businesses remain healthy, but the exceptional second-quarter performance creates difficult comparisons.

Goldman Sachs faces questions about softer FICC trading, higher expenses and the timing of investment banking revenue. Morgan Stanley must demonstrate that its trading franchise remains competitive while wealth management provides recurring earnings support.

Both institutions could benefit from improving merger activity, stronger underwriting pipelines and continued AI infrastructure investment.

However, the most important catalyst may be management's outlook for the fourth quarter and 2027.

For investors evaluating GS stock news and MS stock earnings expectations, strong results alone may not be sufficient. The market will want evidence that trading profitability, investment banking momentum and operating leverage can remain durable as capital markets activity normalizes.

A positive outlook could help reverse the recent weakness in financial stocks. Conversely, disappointing trading results or weaker deal pipelines could reinforce concerns that Wall Street's earnings cycle has already reached its peak.

Frequently Asked Questions

• What are the key metrics investors should watch in Goldman Sachs and Morgan Stanley's Q3 2026 earnings?

• Can Goldman Sachs and Morgan Stanley sustain their strong trading and investment banking performance?

• How could Goldman Sachs and Morgan Stanley earnings impact GS and MS stocks?