2026 is setting up to be a solid year for U.S. investment banks.
Not only is dealmaking activity expected to improve from an already-strong 2025, but IPO activity should pick up steam as well, with potential IPOs from SpaceX or OpenAI poised to hit $1+ trillion valuations.
With that in mind, let’s take a look at two of Wall Street’s heaviest hitters when it comes to dealmaking: Goldman Sachs (GS) and Morgan Stanley (MS).
First, a bit more background.
2025 was one of the strongest years for mergers and acquisitions (M&A) activity on record, with $4.9 trillion in deals falling shy of only 2021’s $5.6 trillion and rising 40% over the prior year.
Management consulting firm Bain & Co. surveyed more than 300 M&A executives and found that 80% of them expect deal volume to accelerate (or at least hold steady) in 2026.
And in its most recent earnings call, Goldman Sachs noted that its deal backlog is at a four-year high, while Morgan Stanley CFO Sharon Yeshaya highlighted the firm’s “accelerating pipeline in M&A and IPOs” in an interview with Reuters.
On the IPO front, new offerings fell off a cliff in the bear market of 2022 (2021 was a historic year for IPOs as well), but that market has been thawing since, and initial public offerings may actually be poised to heat up in 2026, especially should a company like SpaceX, OpenAI, or Anthropic come public.
In other words, the table is set for continued strength in dealmaking. So let’s take a look at the tale of the tape for Goldman Sachs vs. Morgan Stanley.
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Goldman Sachs (GS) vs. Morgan Stanley (MS): The Tale of the Tape
Stock price performance (1-year)
- GS: +48.53%
- MS: +33.84%
Valuation
- P/E (TTM): GS 17.95 vs. MS 17.80
- P/B: GS 2.24 vs. MS 2.87
Dividend yield
- GS: 1.93%
- MS: 2.20%
Institutional ownership (percent of float)
- GS: 75.16%
- MS: 83.03%
Total deal volume
- GS: $1.61T
- MS: $1.14T
Round 1: Stock performance — Advantage: GS
GS has been the better performer over the last one- and five-year periods, rising 45.5% and 239.6%, respectively, vs. 32.7% and 170.7% returns for MS.
That said, like GS, MS has still had a strong run and is trading just off of its all-time highs.
Round 2: Valuation — Mixed, but edge to GS on book / MS on earnings
- Price/Earnings (P/E): MS is slightly cheaper on earnings.
- Price/Book (P/B): GS is meaningfully cheaper on book.
While dealmaking fees are independent of an investment bank’s book of assets, P/B is still a reality check for banks. On that lens, GS looks less stretched than MS.
Round 3: Dividend yield — Advantage: MS
MS offers a modestly higher dividend yield, but if your 2026 thesis includes “higher-for-longer rates plus decent equity returns,” that extra yield can be meaningful—especially if deal volumes don’t accelerate as quickly as hoped.
Round 4: Institutional ownership — Advantage: MS
MS is more popular among institutional investors, who hold meaningfully more of the “float” (publicly available shares) than they do in GS.
But that can cut both ways, as it suggests deep sponsorship and broad index/fund participation (often supportive in drawdowns) but can also mean more “crowding” (less incremental buyer power and more selling “ammunition” if sentiment flips).
Round 5: Total deal volume — Advantage: GS (the key round)
Goldman Sachs is the 800-pound gorilla when it comes to investment banking and is routinely at the top of the heap when it comes to total volume.
In 2025, Goldman advised on $1.6 trillion in deals (per this scorecard from dealogic), which put them well ahead of Morgan Stanley’s $1.1 trillion.
Similarly, in 2024, Goldman rang up $968 billion in advised deals against Morgan Stanley’s $744 billion.
These are both heavy hitters, but Goldman leaves the competition in the dust, and when advisory and underwriting activity rises, the bank that’s already winning the biggest mandates tends to capture a disproportionate share of the incremental fees (and the headlines).
Business mix reality check: “Best investment bank” vs “best stock for a deal boom”
Both are elite, but the market exposure isn’t identical:
- Goldman (GS) is commonly viewed as more levered to institutional-facing businesses (investment banking + markets), which tend to benefit directly when M&A/IPO calendars fill up.
- Morgan Stanley (MS) has more of a wealth/asset-management ballast—which can dampen downside but can also dilute “pure-play” upside to a deal surge.
So even if both banks participate in a 2026 surge, GS gives you more exposure to the thesis.
The Verdict: Goldman Sachs (GS) Comes Out on Top
Both companies should do well in a deal-heavy environment, and they’re both “Bull Market Stocks” (as Mike Cintolo would put it), but if you’re looking to play an M&A and IPO boom in 2026, Goldman Sachs gives you the most upside.
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