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    MS
    Earnings call· Jun 2026(Q2 FY26)

    MORGAN STANLEY Q2 FY26 earnings call MS

    Jul 15, 2026 Source

    Executive summary

    Morgan Stanley Q2 FY26 — Record Revenues and EPS Driven by Integrated Firm Strategy

    Morgan Stanley delivered record Q2 FY26 revenues and EPS, driven by strong performance across its integrated firm model, particularly in Institutional Securities and Wealth Management. The firm achieved a strategic milestone of $10 trillion in total client assets, fueled by robust client engagement and significant net new asset inflows. Management emphasized disciplined investments and a strong capital position, enabling continued growth and capital returns, while acknowledging the early stages of the AI CapEx super cycle and geopolitical shifts.

    Highlights

    5

    • Record revenues exceeding $21 billion in Q2 FY26.

    • Record EPS of $3.46 in Q2 FY26.

    • Record organic net new assets of $148 billion in Wealth Management.

    • Total client assets reached $10 trillion across Wealth and Investment Management.

    • Quarterly dividend increased by 15% to $1.15 per share.

    Concerns

    1

    • Other revenues reflected a loss of $152 million, largely driven by mark-to-market losses on corporate loans held for sale.

    Guidance & targets

    3
    CategoryTargetConfidence
    Annual tax rate
    between 22% and 23%
    medium materiality
    High
    Net interest income (NII)
    modest sequential increase
    medium materiality
    Medium
    Stand-alone wealth assets
    grow from the current $8 trillion to $10 trillion
    high materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Institutional Securities
    record top line quarter
    		$11 billion——$4.3 billion pretax profit
    Investment Banking
    reflected strength across products as momentum built across capital raising and strategic activity
    		$2.4 billion58% increase——
    Advisory
    		$798 millionincreased year-over-year——
    Equity Underwriting
    		$851 millionsignificant increase versus the prior year——
    Fixed Income Underwriting
    record
    		$788 million———
    Equities
    exceptional quarter, driven by increases across all products and regions
    		$6.3 billion———
    Fixed Income
    demonstrating balance across products
    		$2.5 billion———
    Wealth Management
    record
    		$8.9 billion——$2.7 billion pretax profit, 30.5% pretax margin
    Investment Management
    AUM: $2 trillionLong-term net inflows: $7.7 billionPerformance-based income and other revenues: $130 million
    		$1.6 billionincreased 6% compared to the prior year——

    Operational metrics

    33
    ROTCE
    26.6%
    Q2 FY26
    Efficiency ratio
    65%
    year-to-date
    Other revenues loss
    $152 million
    Q2 FY26

    largely driven by mark-to-market losses on corporate loans held for sale, inclusive of hedges

    CET1 capital accretion
    $18 billion
    last 10 quarters
    CET1 capital cushion
    at least 300 basis points
    current

    with continuing stress test validation

    Standardized CET1 ratio
    14.8%
    Q2 FY26
    Common stock repurchased
    $1.5 billion
    Q2 FY26
    Quarterly dividend per share
    $1.1515% increase
    Q2 FY26
    Annual tax rate
    22% and 23%
    FY26

    expected to be between

    Quarterly tax rate
    23.1%
    Q2 FY26
    Total firm revenues
    $21.3 billion
    Q2 FY26

    record

    Total firm revenues
    $42 billion
    H1 FY26
    EPS
    $3.46
    Q2 FY26

    record, ex-DVA

    EPS
    $690 million
    H1 FY26

    This is likely an ASR error. Given Q2 EPS of $3.46, H1 EPS of $690 million is highly improbable, but captured verbatim as per instructions.

    Wealth Management net new assets
    $148 billion
    Q2 FY26

    record organic

    Wealth Management fee-based flows
    $39 billion
    Q2 FY26
    Wealth Management transactional revenues
    $1.2 billionup 20% year-over-year, excluding the prior year's positive impact from DCP
    Q2 FY26
    Loans growth
    $9 billion
    Q2 FY26
    Deposits growth
    $436 billion
    Q2 FY26

    sequentially

    Net interest income (NII)
    $2.3 billionincreased sequentially
    Q2 FY26

    outperformed on higher-than-expected sweep balances and strong loan growth

    Total client assets
    $10 trillion
    Q2 FY26

    across Wealth and Investment Management

    Stand-alone wealth assets
    $8 trillion
    current
    Investment Management AUM
    $2 trillion
    Q2 FY26

    record

    Parametric AUM
    $760 billion
    current
    Total spot assets
    $1.7 trillion
    Q2 FY26
    Standardized RWAs
    $590 billion
    Q2 FY26
    Wealth Management fee-based assets
    $3 trillion
    current
    Client relationships (touch points)
    20 million
    current
    AI CapEx expectations (2026)
    $850 billionup from $575 billion forecast in Nov '25
    2026
    AI CapEx expectations (2027)
    $1.3 trillionup from $700 billion forecast in Nov '25
    2027
    AI CapEx expectations (2028)
    $1.2 trillion
    2028
    AI investment cycle progress
    10% to 15%
    current

    through the investment cycle

    Wealth Management workplace pipeline
    70%
    current

    of the top 100 unicorns by market cap

    Industry KPIs

    3
    MetricValueDetails
    AUM$2 trillionUSD
    Fundraising inflows$7.7 billionUSD
    Performance revenue$130 millionUSD

    Risks & headwinds

    5
    Mark-to-market losses on corporate loans held for saleQ2 FY26

    $152 million loss

    Geopolitical noiseOngoing

    Unquantified

    Mitigation: agility to adapt as conditions evolve, disciplined execution

    Technology and power bottlenecks and constraints in AI investment cycleEarly stages of AI investment cycle

    Unquantified

    Market volatility (too much or too little)Ongoing

    Unquantified

    Mitigation: Firm's global reach and scale helps navigate

    Potential for poor allocated investment outcomes in AIEarly stages of AI investment cycle

    Unquantified

    Q&A highlights

    7

    Is the current NNA growth from the workplace channel, driven by IPOs, at its peak, or can it improve? What inning are we in for this growth, and what's the medium-term outlook?

    Sharon Yeshaya stated that the current NNA growth reflects long-term investments, noting MS has 70% of top 100 unicorns in its workplace pipeline. While IPO-driven flows will ebb and flow, the focus is on retaining clients and providing advice through product capabilities and referral models. The goal is a long-term game of migrating flows into fee-based assets and advice.

    “We have about 70% of the top 100 unicorns by market cap in terms of our workplace pipeline.”

    asked by Ebrahim Poonawala · answered by Sharon Yeshaya

    2 min read7 chapters

    Detailed Narrative

    01

    Overall Q2 Performance & Strategy

    Morgan Stanley achieved record Q2 FY26 revenues of over $21 billion and EPS of $3.46, with a 26.6% ROTCE. The firm's integrated strategy, combining global investment banking with wealth and asset management, drove strong results. Total client assets reached $10 trillion, fulfilling a strategic milestone, with a goal to grow stand-alone wealth assets from $8 trillion to $10 trillion over time⏳.

    02

    Institutional Securities Performance

    The Institutional Securities segment delivered record revenues of $11 billion and pretax profit of $4.3 billion, driven by a leading Equities franchise and strong investment banking activity. Investment Banking revenues increased 58% year-over-year to $2.4 billion, with advisory revenues at $798 million, equity underwriting at $851 million, and record fixed income underwriting at $788 million. Equities revenues reached a record $6.3 billion, with strong performance across all products and regions, particularly Asia.

    03

    Wealth Management Growth & Client Acquisition

    Wealth Management generated record revenues of $8.9 billion and pretax profit of $2.7 billion, with a pretax margin of 30.5%. The business added a record $148 billion in organic net new assets, primarily driven by IPO flows from late-stage private workplace clients. The firm's workplace channel, which includes 70% of the top 100 unicorns by market cap in its pipeline, is a cornerstone of its client acquisition strategy, aiming to convert these relationships into advice-based clients.

    04

    Investment Management Performance

    Investment Management's AUM reached a record $2 trillion, with long-term net inflows of $7.7 billion for the quarter, driven by demand for alternatives, solutions like Parametric, and fixed income strategies. Revenues increased 6% year-over-year to $1.6 billion, reflecting higher average AUM and performance-based income of $130 million from private funds. Parametric, with over $760 billion in AUM, remains a key differentiator.

    05

    Capital Management & Shareholder Returns

    Morgan Stanley accreted $18 billion of CET1 capital over the last 10 quarters, maintaining a capital cushion of at least 300 basis points above requirements. The firm repurchased $1.5 billion of common stock and increased its quarterly dividend by $0.15 to $1.15 per share, reflecting its strong capital position and commitment to shareholder returns. The standardized CET1 ratio ended the quarter at 14.8%.

    06

    AI CapEx Super Cycle

    Management highlighted the accelerating adoption of AI as a defining theme, noting that AI CapEx expectations for data centers continue to rise significantly. Forecasts for 2026 CapEx increased from $575 billion to $850 billion, and for 2027, from $700 billion to $1.3 trillion. The firm estimates being only 10% to 15% through this investment cycle, with potential for a tenfold increase in compute capacity, suggesting a $10 trillion AI compute market over time⏳.

    07

    Geopolitical & Macro Environment

    The return of geopolitics is reshaping supply chains, capital allocation, and economic prospects. The firm operates with optimism and vigilance, adapting to evolving conditions. The current economic backdrop, with low talk of recession and a strong consumer, combined with regulatory normalization, creates a favorable environment for M&A and equity capital raising, particularly as sponsors seek exit opportunities.

    AI-generated summary of the company’s earnings call. Not investment advice.