Goldman Sachs vs Morgan Stanley 2026: Which Giant Suits Your Income-Risk Profile?

The 2025 full-year and Q4 results from both banks offer a telling case study in how large capital markets-centric institutions manage cyclicality and aim to balance upside with stability. Morgan Stanley’s increasingly dominant wealth & recurring fees business stands in contrast to Goldman Sachs’ more leveraged exposure to trading, capital markets, and deal pipelines. Investors must weigh the relative predictability of MS against the upside potential (and risk) of GS in an uncertain macro environment.

1. Morgan Stanley: Scaling Predictability

MS reported full-year revenue of ~$70.6 billion for 2025, with Q4 revenues ~US$17.9 billion, and posted EPS of ~US$10.21 for the full year, US$2.68 in Q4. Its wealth management business added ~$356 billion in net new assets in 2025, and in Q4 alone ~$122 billion, with all channels contributing. Wealth revenues were US$31.8 billion for the full year, US$8.4 billion in Q4, with pretax margins north of 29–31 %, a record. Meanwhile, its institutional securities unit saw strong investment banking growth (+47% in Q4 vs prior year), although FICC revenues faced headwinds from lower volatility in FX and softening credit/product flows.

2. Goldman Sachs: Selectively Reducing Cyclicality

Goldman reported Q4 2025 revenues ~US$13.45 billion, net earnings US$4.62 billion, EPS of US$14.01, annual revenues US$58.28 billion. ROE for Q4 ~16 %, and full-year ROE ~15 %. Goldman’s Global Banking & Markets (GBM) business outperformed peers in investment banking fees (USD 2.58 billion in Q4, +25 % YoY), with advisory, debt underwriting, and financing showing strength. Equities and FICC financing revenues rose—both segments now contributing more durable, financing-related income streams. Its asset & wealth management segment (AUS ~$3.61 trillion) is being leveraged toward pretax margins of ~30 %, deeper alternatives exposure, and increased fee-based inflows.

3. Comparative Value and Market Sentiment

MS is being valued as a steady compounder: it is trading at ≈3× book value (tangible book, in some analyst views), with 18–20× earnings multiples, reflecting the market’s preference for stability and high recurring revenue in periods of macro uncertainty. [initial article; corroborated by Citigroup comparison in analyst commentary.] By contrast, GS is close to ~2.7× book and similar earnings multiple—pricing in improved fundamentals but also embedding skepticism around the sustainability of its cycle-exposed businesses. [initial article; consistent with commentary on GS valuation.] A survey of analysts shows little upside for GS: consensus price targets cluster below or near current trading levels, with more ‘Hold/Neutral’ ratings than ‘Buy’.

4. Strategic Implications & Open Questions

For investors and bankers alike, MS appears better positioned if the macroeconomic cycle turns sluggish or deal activity disappoints; its wealth business provides a high earnings floor. GS’s improved mix and strategy execution provide asymmetry: upside is meaningful if rate cuts or capital markets momentum arrive, but downside is steeper if the market turns. Key open questions include:

• What is the outlook for interest rate cuts or stabilization? A prolonged high-rate environment favors GS’s financing businesses and MS’s lending mix, but compresses net interest income elsewhere.
• Can capital markets activity—M&A, IPOs, debt issuance—sustain current momentum, especially amid regulatory shifts and geopolitical risk?
• How will macro factors (inflation, growth, Fed policy) and regulatory risk affect both firms’ ability to deliver margins (particularly in FICC, underwriting, financing)?
• Is the current valuation premium for MS warranted over a multi-year horizon, or are investors overpaying for stability? Conversely, does GS’s undervaluation (if any) compensate sufficiently for its cyclicality?