Investment banks on Wall Street are gearing up for a deal boom in 2025 as president-elect Donald Trump returns to power.
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Investment banks such as Morgan Stanley (MS), Goldman Sachs (GS), and others, are preparing for a surge in initial public offerings (IPOs) and mergers and acquisitions (M&A) in the year ahead. The Reuters news agency is forecasting that investment banking income could rise to $316 billion globally next year, a jump of nearly 6% over 2024 levels.
Global investment banking income has surpassed $300 billion on only five previous occasions in the last 20 years. Trump’s pro-business leanings and de-regulation are expected to spur deals such as IPOs and M&A in the global financial capital of New York.
De-Regulation Under Trump
The Trump administration’s de-regulation could be of particular help to M&A activity, which has been anemic in recent years due to enhanced regulatory scrutiny under current U.S. President Joe Biden. At the same time, revenue from trading stocks and other securities, which is the biggest source of investment bank revenue, is forecast to reach $220 billion in 2025, which would be the highest level in three years.
With revenue on the rise, demand for bankers and their compensation is also expected to grow in the coming year. Pay consultancy Johnson Associates has said that it expects banker salaries to rise in almost every business unit. Headhunters are reportedly working overtime to place people at Wall Street firms in the first quarter of 2025 as Trump returns to the White House.
MS stock has increased 45% in 2024.
Is MS Stock a Buy?
Morgan Stanley stock has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on five Buy, 10 Hold, and no Sell recommendations issued in the last three months. The average MS price target of $128.77 implies 0.94% downside risk from current levels.
