Wall Street's deal machine is waking up. Corporate acquisitions, public offerings, and financing activity have helped investment banks produce some impressive numbers, even as rising borrowing costs threaten the recovery.
JPMorgan, Goldman Sachs, and Citigroup report Tuesday morning, giving you a fresh test of whether the boom has more room to run.
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Theme: Mergers and Acquisitions, Investment Banking, Underwriting, and Capital Markets
The Numbers Are Getting Hard to Ignore
Investment banking is having a strong year. Goldman Sachs generated $3.4 billion in Q2 investment banking fees, up 55% year over year, while Morgan Stanley's investment banking revenue jumped 58% to $2.44 billion. JPMorgan's investment banking fees increased 30%, reaching their highest level since 2021.
Those numbers point toward a recovery in corporate activity after years of relatively subdued dealmaking. Companies are returning to the market to acquire competitors, raise capital, refinance debt, and pursue strategic transactions.
For banks, the opportunity extends beyond advisory fees. Large deals can generate financing, underwriting, trading, and wealth-management opportunities.
What's Driving It
Tuesday Opens a Major Earnings Week
JPMorgan, Goldman Sachs, and Citigroup report Tuesday, followed by Morgan Stanley and Bank of America on Wednesday.
JPMorgan has been preparing for increased activity. The bank has added more than 1,000 bankers globally in 2026 and recently hired veteran dealmaker Rob Sweeney as global chair of investment banking. Management previously indicated that Q3 investment banking fees could grow by mid-to-high teens year over year.
But the outlook is not universally positive. Bank of America has warned of a potential 10% decline in investment banking fees, while higher Treasury yields are raising financing costs and complicating valuations.
That makes this earnings season particularly revealing. The recovery has produced strong results, but the next question is whether companies will keep signing deals when borrowing becomes more expensive.
Not All Deal Revenue Is Equal
Investment banking revenue generally comes from three major activities: advising on transactions, underwriting stocks, and arranging debt financing.
Goldman's Q2 advisory revenue increased 17%, but equity underwriting revenue surged 130%. Citigroup's investment banking revenue rose 44%, helped by stronger debt and equity underwriting, even as advisory revenue declined.
That distinction matters. Strong IPO and financing markets can produce excellent quarters without necessarily signaling a sustained merger boom.
The strongest confirmation would be rising advisory activity alongside healthy underwriting and a growing pipeline of future transactions.
The Chain Reaction
Corporate confidence improves → acquisitions and IPOs increase → banks collect advisory and underwriting fees → financing and trading activity expands → investment banking profits rise
The risk runs in reverse when high borrowing costs or weak markets cause companies to postpone transactions.
What's Working
Deal Activity Creates Operating Leverage
Investment banks carry significant fixed costs, including technology, compliance, and senior banking talent. As activity rises, additional fees can drive faster profit growth, though compensation expenses also rise.
Independent advisory firms offer particularly direct exposure. Evercore's Q2 advisory fees increased 11%, while underwriting fees surged 201% from a smaller base. Its first-half advisory fees climbed 61%, reflecting a stronger transaction environment.
Meanwhile, Morgan Stanley combines investment banking with a massive wealth-management franchise, providing additional diversification when capital-markets activity slows.
What to Watch
Tuesday and Wednesday's reports should focus on advisory fees, equity underwriting, debt issuance, announced deal pipelines, investment banking backlogs, and management guidance.
Pay particular attention to the difference between completed deals and new mandates. Today's fees reflect transactions arranged months earlier. A strengthening pipeline tells you more about the next several quarters.
Goldman Sachs (GS)
What it does: Leading global investment bank specializing in M&A advisory, underwriting, trading, and asset management.
What stands out: Q2 investment banking fees surged 55% to $3.4 billion, including 130% growth in equity underwriting revenue.
The Takeaway: Buy this if you want direct exposure to a stronger dealmaking and capital-markets cycle. The risk is a slowdown in underwriting or trading activity.
Morgan Stanley (MS)
What it does: Combines investment banking, institutional trading, wealth management, and investment management.
What stands out: Q2 investment banking revenue jumped 58%, while total client assets across wealth and investment management reached $10 trillion.
The Takeaway: Buy this if you want dealmaking upside supported by a large wealth-management business. The risk is weaker markets affecting multiple revenue streams.
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JPMorgan Chase (JPM)
What it does: America's largest bank, with major operations in investment banking, lending, payments, and consumer finance.
What stands out: Investment banking fees increased 30% in Q2, while management has expanded its banking team to capture more corporate business.
The Takeaway: Buy this if you want capital-markets growth within a diversified financial powerhouse. The risk is credit deterioration or higher funding costs.
Citigroup (C)
What it does: Provides global corporate banking, capital-markets services, transaction banking, and wealth management.
What stands out: Q2 investment banking revenue increased 44%, supported by particularly strong equity and debt underwriting.
The Takeaway: Buy this if you want a restructuring and capital-markets recovery play with global exposure. The risk is execution challenges and weaker advisory activity.
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Evercore (EVR)
What it does: Independent investment banking firm focused on M&A advisory, restructuring, and capital raising.
What stands out: First-half advisory fees increased 61%, while Q2 underwriting fees more than tripled.
The Takeaway: Buy this if you want concentrated exposure to rising corporate transaction activity. The risk is sharper earnings volatility when large deals are delayed.
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The Pipeline Matters More Than One Quarter
Wall Street's recovery is producing serious revenue growth, but strong results alone cannot guarantee another year of booming deals. Rising financing costs, expensive valuations, and corporate uncertainty could still slow activity.
Tuesday's bank earnings will show how much momentum remains. For you, the most important signal is what executives say about transactions still waiting to close.
Is Wall Street entering another multiyear dealmaking cycle, or enjoying a temporary burst of activity?
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