Supported primarily by solid first-quarter 2026 results, shares of Morgan Stanley MS have gained 13.2% so far this year, outperforming the S&P 500 Index’s 9.7% growth and the industry’s 2.2% decline.
In the March-ended quarter, MS benefited mainly from robust client engagement and strength in investment banking (IB) and trading activities. Advisory revenues, equity underwriting revenues and fixed income underwriting revenues increased 74%, 24% and 10%, respectively. Likewise, equity and fixed income trading revenues rose 25% and 29%, respectively, on a year-over-year basis.
Along with strong first-quarter results, increasing optimism among investors about artificial intelligence (AI)-led economic growth, resilient U.S. consumer spending and stronger equity markets in 2026 have supported Morgan Stanley stock so far in 2026.
If we compare MS’ price performance with two of its closest peers, JPMorgan JPM and Goldman SachsGS, it appears that MS has outperformed JPMorgan but marginally underperformed Goldman Sachs. So far this year, shares of JPMorgan have lost 4.9%, while Goldman Sachs stock has gained 13.4%.
YTD Price Performance
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Given Morgan Stanley’s impressive price performance, investors might be tempted to invest in the stock now. But, before making any investment decision, let us dig deep into the company’s fundamental strength and growth prospects.
What’s Aiding Morgan Stanley’s Growth?
Increased Focus on Wealth Management Operations: For a long time now, Morgan Stanley has been lowering its reliance on capital markets for income generation. It has been focusing more on expanding its wealth and asset management operations through targeted acquisitions that expand distribution and deepen engagement. The purchases of E*TRADE and Eaton Vance accelerated its move into scaled wealth channels and investment solutions. It also built a meaningful workplace wealth footprint through Solium (now Shareworks by Morgan Stanley), extending its reach via corporate stock-plan relationships.
The acquisition of EquityZen broadened access to private-market liquidity and investments, capabilities that can strengthen client retention and wallet share.
By the end of 2025, the wealth and investment management segments together accounted for 54% of the firm’s total net revenues, up from 26% in 2010. The wealth management segment’s total client assets have witnessed a five-year (2020-2025) compound annual growth rate (CAGR) of 13%, while the investment management segment’s total assets under management saw a CAGR of 19.4% over the same period. As of March 31, 2026, total client assets across both segments reached $9.2 trillion, bringing the company closer to its longstanding $10 trillion asset management target set by former CEO James Gorman.
IB Business Strength: The performance of MS’ IB business has been impressive of late. After the deal slowdown that weighed on results in 2022 and 2023, IB activity has been improving.
In 2024 and 2025, the company’s IB fees rose 35% and 23%, respectively, as boardroom confidence improved and issuance reopened. The uptrend continued in the first quarter of 2026, as IB fees rose 36% year over year.
Looking ahead, a healthy global IB pipeline, an active M&A and IPO market and the company’s leadership position will help benefit it amid the changing macro situation. Management has indicated that pipelines remain steady for the remainder of 2026, supported by strategic activity from corporates and sponsors and ongoing capital formation needs.
Strategic Collaborations: MS’ partnership with Mitsubishi UFJ Financial Group, Inc. MUFG will likely continue to support its profitability. In 2023, the companies announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures. The new partnership saw combined Japanese equity research, sales and execution services for institutional clients at Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities. Also, their equity underwriting business has been rearranged between the two brokerage units. These efforts will solidify the company’s position in Japan’s market.
This has helped Morgan Stanley achieve record equity net revenues, particularly in Asia, through outperformance in prime brokerage and derivatives, led by solid client activity amid heightened volatility.
Robust Balance Sheet Position: As of March 31, 2026, the company had long-term debt of $363 billion, with $27.4 billion expected to mature over the next 12 months. The company’s average liquidity resources were $395.1 billion as of the same date.
Given its solid liquidity position and earnings strength, Morgan Stanley has been engaged in efficient capital distribution activities, through which it enhances shareholder value.
Following the clearance of the 2025 stress test, it announced an 8% hike in quarterly dividend to $1.00 per share. The company has increased its dividend five times in the last five years, with an annualized growth rate of 13.3%. Also, MS reauthorized a multi-year share repurchase program of up to $20 billion (no expiration date). As of March 31, 2026, $15.7 billion in authorization remained available.
Analyzing Morgan Stanley’s Valuation & Estimates
On a valuation basis, shares of Morgan Stanley appear to be trading at a premium relative to the industry. The company’s forward 12-month price/earnings (P/E) ratio of 16.62 is above the industry average of 12.83.
P/E (F12M) Ratio
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JPMorgan has a P/E (F12M) ratio of 13.39, and Goldman Sachs has a forward 12-month P/E ratio of 16.07. Thus, Morgan Stanley is overvalued compared with its two closest peers as well.
If we look at Morgan Stanley’s earnings estimate revisions, it appears that analysts are optimistic regarding the company’s growth. Over the past 30 days, the Zacks Consensus Estimate for the company’s 2026 and 2027 earnings has been revised upward. The 2026 earnings estimate of $11.85 indicates a rise of 16.1% from that reported in the previous year. The 2027 estimate of $12.47 suggests year-over-year growth of 5.2%.
Earnings Estimate Revision
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How to Approach Morgan Stanley Stock Now?
Morgan Stanley’s continued efforts to reduce the dependence on volatile capital markets–driven revenues by strengthening its wealth management and investment management businesses will continue to support growth in the long run because these segments generate more stable, recurring fee income.
Its solid balance sheet and strong capital position provide flexibility to invest in growth initiatives, pursue strategic opportunities and return capital to shareholders.
The company’s premium valuation seems justified by its business transformation and strong earnings stability. With multiple growth levers in place, including expansion in fee-based businesses, disciplined cost management and strategic investments, the company appears well-positioned to sustain financial performance and deliver stable revenue growth over the long term, making it an attractive investment option now.
Currently, Morgan Stanley carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).