VALUATION HIGHLIGHTS

1. Institutional Securities (M&A Advisory, Equity Underwriting & Debt Origination, FICC Trading, Equity Trading, Principal Investments & Other) constitute 48% of the Trefis price estimate for Morgan Stanley's stock.
2. Wealth Management constitutes 45% of the Trefis price estimate for Morgan Stanley's stock.

WHAT HAS CHANGED?

Latest Earnings: Q4 and Full Year 2025

Morgan Stanley reported fourth-quarter 2025 revenue of $17.9 billion, a 10% increase year-over-year, while full-year revenue reached a record $70.6 billion. Net income for the quarter rose to $4.4 billion, resulting in an EPS of $2.68, which represented a 20.7% increase from the prior year and significantly outperformed consensus estimates. Primary drivers included record results in Equity Sales and Trading, a 47% surge in Investment Banking advisory revenues due to a rebound in completed M&A transactions, and continued momentum in the Wealth Management segment, which achieved a record pre-tax margin of 31.4% in the final quarter.

Note: Morgan Stanley's FY'25 ended on December 31, 2025.

Expansion into Private Markets via EquityZen

In early 2026, Morgan Stanley Wealth Management announced a strategic move to widen client access to private markets by cutting transaction fees on private-share trading via its EquityZen marketplace. This pivot is part of the firm's broader "Integrated Firm" strategy, aimed at capturing a larger share of the growing secondary market for private company shares. By lowering the barriers to entry for high-net-worth individuals, the firm expects to drive higher platform volumes and accelerate its progress toward its long-term goal of surpassing $10 trillion in total client assets.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Morgan Stanley's value that present opportunities for upside or downside to the current Trefis price estimate:

Wealth Management

• Fee-Based Client Assets: Fee-based assets reached $2.75 trillion at the end of 2025, supported by $160 billion in annual fee-based flows. If the firm maintains its net new asset (NNA) growth rate of approximately 6% through 2026, there is significant upside to the AUM-driven fee revenue forecast. Conversely, a sharp market correction in the late-cycle bull market could weigh on asset valuations and fee income.
• Pre-Tax Margin Sustainability: The segment reported a record full-year pre-tax margin of 29.3%. Management's focus on operational leverage and technology investments supports the current Trefis margin estimates, though upside exists if the integration of self-directed and advisor-led channels continues to drive efficiency gains beyond expectations.

Institutional Securities

• Equity Sales and Trading Revenue: The division achieved record results in 2025, gaining market share through sustained investment in electronic trading and prime brokerage. Upside to the valuation exists if global client activity remains elevated despite geopolitical uncertainties. However, a "risk-off" environment in 2026 remains a primary downside risk to trading volumes.

For additional details, select a driver above or a division from the interactive Trefis split for Morgan Stanley at the top of the page.

BUSINESS SUMMARY

Morgan Stanley is a global leader in financial services, operating through three customer-centric segments: Institutional Securities, Wealth Management, and Investment Management. The firm's business model is centered on the "Integrated Firm" concept, which leverages a dominant investment bank to fuel a massive, stable wealth management engine. This transformation has shifted the firm's profile toward more durable, fee-based revenue streams, reducing sensitivity to volatile capital market cycles.

SOURCES OF VALUE

The Wealth Management segment remains the firm's primary source of value due to its consistent asset gathering and high-margin recurring revenue.

Dominant Wealth Management Scale

With $9.3 trillion in total client assets, Morgan Stanley possesses a massive "asset gathering" engine. The integration of E*TRADE and Eaton Vance has created a comprehensive ecosystem that captures clients across all wealth tiers, providing a stable foundation of fee-based income that is less volatile than traditional trading or advisory revenue.

Premier Institutional Securities Franchise

Morgan Stanley maintains a top-three global position in Equities trading and M&A advisory. This market leadership allows the firm to capture a disproportionate share of "megadeals" and high-volume institutional flows, providing the critical capital and market intelligence required to support the broader firm's integrated strategy.

KEY TRENDS

AI Technology Diffusion

The firm has identified AI as a non-linear driver of stock performance in 2026. Morgan Stanley is aggressively adopting AI enablers within its research and wealth management platforms to boost advisor productivity and provide predictive financial modeling, positioning the firm as a leader in the digital transformation of financial services.

The Multipolar World Dynamics

Geopolitical and industrial shifts are increasingly influencing global markets, specifically in defense spending and technology localization. Morgan Stanley's strategy involves aligning its investment themes and advisory mandates with these structural changes, helping sovereigns and multinationals navigate less open commerce and supply chain reshoring.

Monetary Policy Transition

As the Federal Reserve moves through an easing cycle in 2026, lower interest rates are expected to serve as a tailwind for equity markets and investment banking activity. Morgan Stanley is positioned to benefit from a continued recovery in the IPO and M&A pipelines as financing costs stabilize for its corporate and private equity clients.

Would you like me to analyze how the projected 2026 growth in private market transaction volumes might impact Morgan Stanley's Wealth Management revenue compared to its main bulge-bracket peers?