Investment banking fees at the six largest U.S. banks surged 45% on average in the second quarter compared to a year earlier, with Morgan Stanley reporting the strongest percentage growth. This resurgence marks the strongest fee-generating quarter since the peak of 2021, and analysts from Morningstar do not expect a material contraction until 2028 or later, indicating an "investment banking super-cycle" is underway. Expectations of these stronger profits have positively impacted Wall Street bank shares, although their increases are more modest than in recent years due to concerns about high valuations.
This boom is fueled by a significant increase in deal-making. U.S. initial public offerings (IPOs) raised a record $104.8 billion in the second quarter, largely driven by Elon Musk’s SpaceX listing, which was the biggest IPO in history, raising $85.7 billion. Goldman Sachs, JPMorgan Chase, and Bank of America were key underwriters for SpaceX. Announced global M&A volumes have also reached over $3 trillion so far in 2026, climbing more than 40% from the previous year, according to Dealogic. Prominent upcoming IPOs include Anthropic and OpenAI, with each expected to be valued around $1 trillion.
Technology companies, particularly AI firms and those providing computing infrastructure for AI, have dominated this activity in 2026. The healthcare, utilities, and energy sectors have also seen accelerated activity. Goldman Sachs CEO David Solomon noted that despite strong investment banking revenues, their backlog increased to its highest level in five years, underpinned by a record advisory backlog. JPMorgan CFO Jeremy Barnum and Bank of America CFO Alastair Borthwick also highlighted robust pipelines and broad-based client engagement across capital markets and strategic transactions.
This robust environment has reopened an important exit channel for financial sponsors, as several private equity and venture capital-owned firms have returned to public markets. However, the initial headline indicates that private capital is largely missing out on the full benefits of this IPO and deal boom, despite the broader market's strength.
