Morgan Stanley Says AI Spending Boom Is Only 10%-15% Complete

Morgan Stanley (NYSE: MS ) on Wednesday reported second-quarter 2026 results that topped Wall Street estimates, driven by record performance in its Institutional Securities business, robust equity trading and a rebound in investment banking activity.

The results came as Wall Street’s biggest banks benefited from buoyant markets and elevated volatility during the quarter.

The bank reported second-quarter 2026 earnings of $3.46 per share, up from $2.13 a year earlier and ahead of the analyst consensus estimate of $2.91.

Revenue rose 27% year over year to a record $21.35 billion, beating the consensus estimate of $19.64 billion.

Net income increased to $5.58 billion from $3.54 billion a year earlier.

Chairman and CEO Ted Pick said strong market activity and steady execution across the firm’s three regions helped Morgan Stanley deliver record revenue of more than $21 billion and record earnings per share.

He attributed the performance to strength in the equities business, continued momentum in investment banking and fixed income, and high client engagement supported by the firm’s research capabilities.

Pick also highlighted a record $148 billion in net new assets in Wealth Management, which helped lift total client assets across Wealth Management and Investment Management to the $10 trillion milestone.

He said the firm’s growing capital position provides flexibility to invest in its core businesses while continuing to deliver strong shareholder returns.

Institutional Securities Delivers Record Quarter Institutional Securities reported record net revenue of $11.04 billion, up 44% from a year earlier.

Investment banking revenue increased 58% to $2.44 billion, reflecting stronger advisory activity, equity underwriting and fixed-income underwriting as capital-raising and strategic transactions accelerated.

Equity trading revenue climbed 69% to a record $6.30 billion, supported by strong client engagement across businesses and regions, particularly in Asia.

Fixed-income revenue rose 13% to $2.46 billion.

Provision for credit losses declined to $98 million from $196 million a year earlier, while the firm’s expense efficiency ratio improved to 65% from 71%.

Return on tangible common equity increased to 26.6% from 18.2%.

Wealth Management Reaches Milestone Wealth Management revenue increased 14% to a record $8.86 billion, driven by higher asset management fees, stronger client activity and higher net interest income.

The business attracted a record $148.1 billion in net new assets during the quarter, lifting total client assets to $8.08 trillion.

Combined client assets across Wealth Management and Investment Management reached the $10 trillion milestone, according to the company.

Investment Management revenue rose 6% to $1.65 billion, supported by higher average assets under management and positive long-term net inflows of $7.5 billion.

The board reauthorized a multi-year share repurchase program of up to $20 billion beginning in the third quarter and increased the quarterly dividend by 15 cents to $1.15 per share.

During the quarter, Morgan Stanley repurchased $1.5 billion of common stock.

Speaking with Bloomberg, Chief Financial Officer Sharon Yeshaya said, “This was a client-led-activity quarter across institutional and retail.

Pipelines are full; we continue to see activity build; we have a lot of engagement to think about from a retention perspective.” On the earnings call, Pick said Morgan Stanley believes the artificial intelligence infrastructure investment cycle is still in its early stages.

He estimated the industry is only “10%-15% of the way through the investment cycle,” citing rapidly rising forecasts for data center capital spending and suggesting AI-related investment has significant room to grow over the coming years.

MS Price Action: Morgan Stanley shares were up 0.99% at $229.93 at the time of publication on Wednesday.

The stock is trading near its 52-week high of $232.11, according to Pro data.

Photo via Shutterstock Read Also: Will Lucid File for Bankruptcy in 2026? Crypto Prediction Market Raises the Odds Despite EV Maker's Denial