Morgan Stanley (MS) Earnings & Analysis

Latest quarter

Morgan Stanley reported Q3 FY2026 revenue of $33.3 billion, compared with $31.2 billion in Q3 FY2025, a 6.69% increase. The company reported diluted EPS of $3.17, compared with $2.80 a year earlier, a 13.3% increase.

On the basis used for the consensus comparison, Morgan Stanley reported revenue of $20.3 billion for the quarter to September 30, 2026, versus consensus revenue of $19.7 billion, and adjusted EPS of $3.03 versus consensus adjusted EPS of $2.83. The company said equities trading revenue rose 41% to $5.8 billion, while investment-banking revenue declined 15% to $1.5 billion on lighter advisory and debt underwriting. Morgan Stanley said Wealth Management revenue was $9.1 billion, compared with $8.2 billion, and reported a 30.4% pre-tax margin for that business.

The company reported a Q3 FY2026 gross margin of 95.6%, versus 96.3% a year earlier, and an operating margin of 58.3%, versus 60.9%. Morgan Stanley reported Q2 FY2026 free cash flow of −$3.6 billion, compared with $11.1 billion in Q2 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q2 2026 earnings call, Chief Executive Officer Ted Pick said client activity remained elevated across the firm’s investment-banking, markets, wealth-management and investment-management businesses. Pick said the firm’s integrated model was intended to raise, manage and allocate capital for institutional and individual clients, while artificial intelligence adoption and geopolitics were reshaping client decisions on supply chains, capital allocation and economic prospects.

Chief Financial Officer Sharon Yeshaya said Institutional Securities generated Q2 revenue of $11 billion and pre-tax profit of $4.3 billion, with equities and investment banking contributing to the result. She said investment-banking pipelines were healthy, client dialogue was broad-based across sectors, and global activity was building. Yeshaya also said Wealth Management generated Q2 revenue of $8.9 billion and pre-tax profit of $2.7 billion, supported by asset levels and retail engagement. She said the business expected a modest sequential increase in net interest income in Q3.

Yeshaya said higher technology spending was supporting infrastructure, AI-enabled efficiencies and business growth, while top-line growth and execution offset higher execution-related costs and strategic investments through the first half. She said Wealth Management’s Q2 pre-tax margin was 30.5% and described the investments as intentional spending for the business’s future.

Analysts asked about flows from the workplace channel and IPO activity. Yeshaya said IPOs and workplace relationships could bring clients onto the platform, but that quarterly inflows could ebb and flow. She said the company’s focus was retaining those clients, providing advice and moving flows into fee-based assets.

Analysts also asked how Morgan Stanley would deploy its capital. Pick said clients were seeking more financing and market capacity across investment banking, fixed income, equities and wealth management. He said the firm intended to maintain a capital buffer and favored reinvesting organically, although it was reviewing potential bolt-on acquisitions that could add clients, adjacent capabilities or exposure to selected geographies.

On pricing, Pick said there was some pricing leverage depending on the product and what clients sought to access. He said the sustainability of that pricing also depended on asset prices, economic growth, inflation, geopolitics and market volatility, rather than providing a quantified outlook.

Guidance

Morgan Stanley said it continues to expect its FY2026 tax rate to be between 22.0% and 23.0%, with quarterly volatility. On the Q2 call, Yeshaya said the company expected a modest sequential increase in Wealth Management net interest income in Q3.