Yesterday, Morgan Stanley (MS Quick QuoteMS - Free Report) shares reached an all-time high of $171.77 during the trading session to finally close at $169.92. This was driven by reports indicating that the longest-running government shutdown is ending soon. 

The U.S. government shutdown stalled SEC and antitrust reviews, delaying IPOs and M&A, creating backlogs, disrupting valuations and data access. This ultimately hampered deal flow and revenues for investment banks like Morgan Stanley and its peers, such as Goldman Sachs (GS Quick QuoteGS - Free Report) and JPMorgan (JPM Quick QuoteJPM - Free Report) .

This year, Morgan Stanley shares have soared 35.2% outperforming the industry’s 31.9% growth. The stock has performed better than JPMorgan, while lagging behind Goldman.

YTD Price Performance 
 

Image Source: Zacks Investment Research

What’s Driving Morgan Stanley’s Performance?

Increased Focus on Wealth & Asset Management Operations: Morgan Stanley has lowered its reliance on the capital markets for income generation. It has now been focusing on expanding its wealth and asset management operations. The buyouts of Eaton Vance, E*Trade Financial and Shareworks are steps in this direction. 

Also, in October, Morgan Stanley announced an agreement to acquire EquityZen in an effort to tap the rapidly growing private markets landscape. These moves bolster the company’s diversification efforts, enhance stability and create a more balanced revenue stream across market cycles.

The wealth and asset management businesses’ aggregate contribution to total net revenues jumped to more than 55% in 2024 from 26% in 2010. We project both segments' total contribution (in aggregate) to the top line to be 54.2% in 2025.

The Wealth Management (WM) segment’s total client assets witnessed a five-year (2019-2024) compound annual growth rate (CAGR) of 18.1%, while the Investment Management (IM) segment’s total assets under management saw a CAGR of 24.7%. The upward momentum is expected to continue as the operating environment becomes more favorable. For 2025, we project the WM segment’s total client assets and the IM segment’s total AUM balance to rise 4.5% and 9.1%, respectively, on a year-over-year basis.

Strategic Alliances: MS’ partnership with Mitsubishi UFJ Financial Group, Inc. 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.

Also, this has helped the company achieve record equity net revenues, particularly in Asia, through outperformance in prime brokerage and derivatives, led by solid client activity amid heightened volatility. The company’s Asia region revenues jumped 29% year over year to $7.27 billion in the first nine months of 2025.

Solid Balance Sheet & Capital Position: Morgan Stanley has a solid balance sheet. As of Sept. 30, 2025, the company had long-term debt of $324.1 billion, with $25.4 billion expected to mature over the next 12 months. The company’s average liquidity resources were $368.1 billion as of the same date. 

Morgan Stanley’s capital distribution plans have been impressive. Following the clearance of the 2025 stress test, it announced an 8% hike in quarterly dividend to $1.00 per share and reauthorized a multi-year share repurchase program of up to $20 billion (no expiration date). The company has increased its dividend five times in the last five years, with an annualized growth rate of 20.4%.

Given a solid liquidity position and earnings strength, Morgan Stanley is expected to be able to continue with efficient capital distribution activities, thereby enhancing shareholder value.

Factors That Could Hamper Morgan Stanley’s Growth

Rising Expense Base: Despite Morgan Stanley’s restructuring and streamlining efforts that resulted in achieving its cost savings target of $1 billion in 2017, overall expenses have been increasing. Though expenses declined in 2022, the metric witnessed a five-year (ended 2024) CAGR of 7.8%. The rising trend continued in the first nine months of 2025.

Expenses are expected to remain elevated due to the steady increase in revenues (leading to higher compensation costs) and inflation, as well as the company’s investments in franchise and inorganic growth efforts. Our estimates for total non-interest expenses indicate a year-over-year increase of 9.1% this year.

Reliance on Trading Revenues: Morgan Stanley’s over-dependence on trading revenues is worrisome. While sales and trading revenues improved in 2021, 2022 and 2024, they declined in 2023. Trading performance improved again in the first nine months of 2025 because of the uncertainty surrounding the tariff plans. 

Because of the volatile nature of the business and expectations that it will gradually normalize toward the pre-pandemic levels, growth in trading revenues might become challenging in the upcoming quarters. While we expect equity and fixed-income trading revenues to rise 26% and 5.9% in 2025, respectively, they are anticipated to decline in 2026 on a year-over-year basis.

Is Morgan Stanley Stock a Buy Now?

Morgan Stanley’s efforts to become less dependent on capital markets-driven revenues, its inorganic expansion efforts/strategic alliances, along with declining rates, are expected to aid financials. 

However, rising expenses will likely hurt the company’s profitability in the near term. High reliance on trading revenues is another headwind. Nonetheless, an enhanced deal-making backdrop will drive Morgan Stanley’s financials. Also, supported by a solid balance sheet position, the company is expected to be able to meet near-term debt obligations, even if the economic situation worsens. 

Analysts seem to be bullish regarding MS’ earnings growth prospects. Over the past month, the Zacks Consensus Estimate for the company’s 2025 and 2026 earnings has moved upward. The estimates indicate year-over-year growth rates of 19.8% for 2025 and 5.8% for 2026.

Earnings Estimates
 

Image Source: Zacks Investment Research

Hence, this seems to be the right time to buy Morgan Stanley shares before they soar further. At present, the company sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.