Goldman and Morgan Stanley Set to Validate the M&A Renaissance

1. 🔑 Key Points

• JPMorgan’s Miss is Likely Idiosyncratic, Not Systemic: JPMorgan’s Q4 2025 investment banking revenue miss (down 2% year-over-year) appears driven by specific weaknesses in debt underwriting and execution timing rather than a collapse in global deal flow. The bank maintained its #1 league table ranking, and management remains optimistic about 2026 pipelines.
• Goldman Sachs and Morgan Stanley Expected to Validate the "Renaissance": Unlike universal banks, these "pure-play" giants are forecast to post strong Q4 results, with Goldman Sachs stock trading near all-time highs and analysts projecting a "dealmaking renaissance" driven by advisory fees. Their earnings are widely expected to decouple from the mixed results seen at diversified peers like Bank of America and JPMorgan.
• The Underlying M&A Market Remains Robust: Global M&A volume surged 42% in 2025 to approximately $1.1 trillion, fueled by an "infrastructure supercycle," AI re-tooling, and private equity exits. This structural momentum suggests the "M&A renaissance" is delayed only in specific pockets, not denied, with 2026 setups pointing to a continued recovery.

2. The State of the "M&A Renaissance"

The narrative of a dealmaking resurgence has dominated Wall Street's outlook for late 2025 and early 2026. Despite JPMorgan's recent stumble, broader market data suggests the recovery is not only intact but accelerating in key sectors.

2.1 A $1 Trillion Year

Contrary to the gloom suggested by some bank earnings, 2025 was a banner year for volume.

• Global Volume: Deal volume reached approximately $1.1 trillion, a 42% increase from 2024 levels.
• Megadeals: The year saw a resurgence in "megadeals" (transactions >$10 billion), particularly in the technology and energy sectors, as companies positioned themselves for the AI and energy transition era.
• Private Equity: After years of dormancy, financial sponsors began to exit vintage positions, unlocking a massive backlog of assets that is expected to flood the market in 2026.

2.2 The "Infrastructure Supercycle"

A key driver of this activity is what Goldman Sachs has termed an "infrastructure supercycle." Corporations are not just buying growth; they are re-tooling their entire operational stacks.

• AI & Data Centers: Massive capital outlays are flowing into digital infrastructure, driving M&A in real estate, utilities, and tech services.
• Energy Transition: Traditional energy companies are acquiring renewable platforms to meet 2030 targets, creating a sustained floor for deal activity independent of interest rate fluctuations.

3. Deconstructing JPMorgan’s "Miss"

JPMorgan Chase’s Q4 2025 earnings released on January 13, 2026, sent mixed signals, but a closer look reveals the weakness may be specific to the firm's business mix rather than the market at large.

3.1 The Numbers

3.2 Why Did They Miss?

The shortfall was primarily in debt underwriting, where fees plummeted 16%. Advisory fees were down a modest 3%, and equity underwriting slipped 2%.

• Execution & Timing: CFO Jeremy Barnum acknowledged that certain deals slipped into Q1 2026, a common occurrence that affects quarterly timing but not annual trendlines.
• Universal Bank Drag: As a massive diversified lender, JPMorgan is more exposed to the broader credit environment. The drop in debt underwriting fees suggests borrowing costs may still be weighing on leverage-heavy deals, a segment less critical to the pure strategic advisory business that fuels Goldman and Morgan Stanley.
• Management Sentiment: Despite the miss, CEO Jamie Dimon’s commentary focused on geopolitical risks ("markets seem to underappreciate potential hazards") rather than a lack of deal pipeline, signaling that the appetite for deals remains, provided stability holds.

4. The Verdict: Goldman Sachs and Morgan Stanley

As the "pure-play" investment banks prepare to report, the market anticipates a stark divergence from the universal banks. Investors are betting that these firms will capture the lion's share of the high-margin advisory fees generated by the M&A boom.

4.1 Goldman Sachs: The "Renaissance" Leader

Goldman Sachs is positioned as the primary beneficiary of the strategic M&A wave.

• Stock Performance: Heading into earnings, GS stock has rallied ~63% over the past year, trading near all-time highs. This price action implies the market has already "looked through" the noise affecting peers.
• Expectations: Analysts project Q4 EPS of roughly $11.77, driven by dominance in league tables. The firm advised on over half of the year's megadeals.
• Key Catalyst: The anticipated IPO of major unicorns (e.g., OpenAI, SpaceX) in 2026 sits squarely in Goldman's wheelhouse. Their earnings are expected to confirm a massive backlog of equity capital markets (ECM) mandates.

4.2 Morgan Stanley: The Wealth & Advisory Engine

Morgan Stanley reports today (Jan 15, 2026) with similarly high expectations, balancing its massive wealth management arm with a resurgent advisory practice.

• Consensus Estimates: EPS is projected around $1.41, an ~8.6% increase YoY.
• Strategic Focus: CEO Ted Pick has championed the "integrated model," where the bank's advisory arm feeds its wealth management ecosystem. The firm is expected to show strong advisory fee growth, validating the "renaissance" thesis.
• Differentiation: Unlike JPMorgan, Morgan Stanley's exposure to consumer lending is minimal, insulating it from the debt underwriting drag that hurt JPM.

5. Systemic Delay or Green Light?

Based on the available data, JPMorgan's miss does not suggest a systemic delay in dealmaking. Instead, it highlights a bifurcation in the market.

• Strategic vs. Financial: Strategic M&A (corporates buying corporates) is robust, which benefits advisory-focused firms like Goldman and Morgan Stanley. Financial M&A (PE buyouts relying on debt) is recovering but remains sensitive to rates, impacting debt underwriters like JPMorgan more heavily.
• The Pipeline is Real: All three major banks have confirmed record or near-record pipelines. The "miss" was largely a function of closing timing, not origination failure.
• 2026 Outlook: The consensus across Wall Street is that 2026 will see the "floodgates open" for IPOs and sponsor exits. JPMorgan's cautious guidance is likely an effort to manage expectations, whereas GS and MS are expected to lean into the bullish "renaissance" narrative.

Conclusion: Expect Goldman Sachs and Morgan Stanley to validate the M&A renaissance. Their results will likely show that while the financing of deals (JPM's headache) remains choppy, the structuring and advising of deals (GS/MS's gold mine) is back in a bull market.

6. 📚 Recommended Topics for Further Exploration

• The 2026 IPO Pipeline: Research the "Unicorn Class of 2026" (e.g., Databricks, SpaceX) and which banks hold the lead mandates.
• Private Credit vs. Syndicated Loans: Explore how the shift from bank financing to private credit is eating into traditional debt underwriting fees for banks like JPMorgan.
• Antitrust Landscape 2026: Investigate how the new regulatory environment under the current administration is impacting megadeal approval rates.
• Boutique Investment Banks: Look at the performance of Evercore (EVR) and Lazard (LAZ) to confirm if the advisory boom is lifting independent firms even more than the bulge bracket.