By Manya Saini and Tatiana Bautzer
Jan 15 (Reuters) - Wall Street's investment bankers expect to stay busy this year after reaping a windfall from big-ticket deals and stock market listings in 2025.
Top U.S. banks reported stronger fourth-quarter profits this week, with Goldman Sachs' investment banking fees jumping 25% on a dealmaking boost and rival Morgan Stanley reporting a 47% surge in investment banking revenue. Citigroup clinched record revenue from M&A advisory last year.
"We are seeing an accelerating
pipeline in M&A and IPOs," Morgan Stanley's chief financial officer, Sharon Yeshaya, said in an interview with Reuters, adding that the bank expects more deals in healthcare and industrial sectors.
Executives at other major banks also said deal pipelines remained active, though quarterly results at some firms were more modest than analysts had projected.
Bank of America's investment banking fees rose a marginal 1% in the quarter. JPMorgan Chase disappointed investors with lackluster revenues in the division due to tougher comparisons and some deals getting pushed to 2026, even though it still earned the highest fees industry-wide last year, according to Dealogic data.
Global investment banking revenues crossed $100 billion in 2025, Dealogic's data showed. The milestone is significant as bankers saw a long-anticipated recovery materialize last year, following several challenging years marked by high interest rates and market volatility.
"In terms of the outlook, we expect strong client engagement and deal activity in 2026, supported by constructive market dynamics, which is reflected in our pipeline," JPMorgan CFO Jeremy Barnum told analysts on a post-earnings call on Tuesday.
RICH IPO PIPELINE IN 2026
The roster of high-profile companies reportedly exploring IPOs in 2026 has grown in recent months and now includes ChatGPT maker OpenAI, Elon Musk's rocket startup SpaceX and AI chipmaker Cerebras.
A more permissive U.S. antitrust backdrop and a stronger equity market are expected to spur companies to seek scale through larger mergers and acquisitions.
"We entered 2026 with our deal pipeline meaningfully greater than it has been at any point in the last five years, although market conditions can always change," Wells Fargo CEO Charlie Scharf said on a call with analysts on Wednesday.
A strong year for big-ticket deals and IPOs defied expectations in 2025 that activity would be derailed after U.S. President Donald Trump announced sweeping tariffs on major global economies in the spring, unsettling markets and investors worldwide.
Meanwhile, sponsor-led activity is also expected to pick up in 2026 as private equity and venture capital firms seek exits after years on the sidelines, waiting for valuations to recover and investor demand to return.
"Sponsors are also increasing activity because they have the dual track alternative now, either selling through an M&A transaction or an IPO," Morgan Stanley's Yeshaya said.
MEGA DEALS RETURN
Large transactions returned in 2025, led by videogame developer Electronic Arts' proposed $55 billion take-private deal, which would rank as the largest leveraged buyout in history if completed.
Union Pacific's $85 billion bid for smaller rival Norfolk Southern, agreed in July, is currently being reviewed by regulators.
An unexpected burst of dealmaking late in the year saw bankers and advisers from Wall Street to Canary Wharf working through the holidays, laptops packed next to gifts.
Although Warner Bros Discovery's sale has grown more complex as streaming giant Netflix and Paramount Skydance vie for the storied Hollywood studio, analysts say a successful deal could pave the way for more M&A as regulatory hurdles appear less formidable.
The year was especially significant for Wells Fargo, which has set an ambitious goal of becoming a top-five U.S. investment bank as it diversifies beyond its consumer lending roots.
CEO Scharf said the bank advised on two of the largest M&A deals of 2025 and climbed to eighth in announced M&A rankings from 12th a year earlier.
(Reporting by Manya Saini in Bengaluru and Tatiana Bautzer in New York, Editing by Lananh Nguyen and Saumyadeb Chakrabarty)
