Morgan Stanley (MS Quick QuoteMS - Free Report) is set to announce third-quarter 2026 earnings on Oct. 14 before market open. The company’s upcoming financial results and management conference call are likely to draw considerable attention from analysts and investors, particularly for updates on the deal pipeline and management’s outlook for capital markets.

Morgan Stanley’s first-half 2026 performance was impressive, with net revenues jumping 21% year over year on the back of robust trading and investment banking (IB) performance. However, the company’s results in the to-be-reported quarter are likely to be subdued because of a tough operating backdrop. The Zacks Consensus Estimate for third-quarter revenues of $19.63 billion suggests 7.7% year-over-year growth.

In the past seven days, the consensus estimate for earnings for the to-be-reported quarter has been revised 4.7% lower to $2.83. The figure indicates just 1.1% rise from the prior-year quarter.

Estimate Revision Trend
 

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MS has an impressive earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 19.41%.

Earnings Surprise History
 

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Major Factors to Consider for Morgan Stanley’s Q3 Results

IB Income: Following a record-breaking first half, global deal-making activity moderated significantly in the third quarter, weighed down by elevated interest rates, persistent inflation and geopolitical uncertainties that complicated valuations and deal negotiations. Still, strategic buyers continued to pursue acquisitions aimed at strengthening scale, operational resilience and supply-chain security amid a challenging business environment. Meanwhile, a stronger U.S. dollar prompted American companies to explore acquisition opportunities in Europe, while expectations of robust economic growth in the United States continued to attract foreign investment interest.

So, overall global mergers and acquisitions (M&As) volume and value were muted as only a handful of big transactions dominated the space. Still, given Morgan Stanley’s position as one of the leading players in the space, it is expected to have driven advisory fees in the third quarter. The Zacks Consensus Estimate for advisory fees is pegged at $798 million, indicating year-over-year growth of 16.7%

IPO activity remained robust in the third quarter, with proceeds climbing to a five-year high, largely driven by sizable offerings in the artificial intelligence (AI) and technology sectors, despite a year-over-year decline in the number of deals. Meanwhile, global equity and debt issuance activity lost momentum in the to-be-reported quarter following a record-setting first half, as geopolitical uncertainties, persistent inflation and fluctuating energy prices dampened investor risk appetite. Hence, Morgan Stanley’s equity and fixed income underwriting business performance is expected to have been subdued.

The Zacks Consensus Estimate for equity underwriting fees of $663.8 million suggests a year-over-year rise of 1.8%. The consensus estimate for fixed-income underwriting fees is pegged at $669.8 million, indicating a fall of 13.2%. The consensus estimate for total underwriting fees of $1.33 billion implies a decline of 6.3%.

The Zacks Consensus Estimate for IB income of $2.27 billion indicates no growth. 

Trading Revenues: The performance of Morgan Stanley’s trading business (constituting a significant portion of its top line) is expected to have been solid in the third quarter, as client activity remained robust, supported by heightened market volatility. Trading conditions were shaped by evolving expectations surrounding AI, ongoing geopolitical uncertainties, persistent inflationary pressures and the Federal Reserve’s hawkish monetary policy stance. These factors contributed to elevated volatility across equities and other asset classes, including commodities, fixed income and foreign exchange, creating a dynamic trading environment.

In July, E*TRADE from Morgan Stanley launched spot trading in digital assets, strengthening its presence in the evolving cryptocurrency market. The initiative is expected to broaden its product portfolio, attract digitally inclined investors and create additional opportunities for client engagement amid growing interest in digital assets. 

The Zacks Consensus Estimate for the company’s equity trading revenues is pegged at $4.51 billion, suggesting a rise of 9.6% from the prior-year quarter. The consensus estimate for fixed-income trading revenues of $2.16 billion indicates a marginal decline.

Net Interest Income (NII): In the to-be-reported quarter, the Fed raised interest rates by 25 basis points to 3.75-4.00% for the first time in more than three years because of persistently high inflation. However, this is less likely to have affected Morgan Stanley’s NII numbers much in the third quarter. 

The lending scenario is likely to have normalized in the third quarter, which, along with stabilizing funding/deposit costs, is expected to have offered much-needed support. Hence, Morgan Stanley’s NII is likely to have witnessed a decent improvement in the quarter.

The Zacks Consensus Estimate for net interest revenues is pegged at $2.63 billion, suggesting a rise of 5.4% on a year-over-year basis.

For the wealth management segment, management expects NII to rise modestly on a sequential basis.

Expenses: Cost reduction, which has long been Morgan Stanley's primary strategy for remaining profitable, is unlikely to have provided much support in the September-ended quarter. As the company has been increasingly spending on technology, AI and data infrastructure, overall costs are likely to have been elevated.

What Our Quantitative Model Unveils for MS

Our proven model does not predict an earnings beat for Morgan Stanley this time around. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

The Earnings ESP for Morgan Stanley is -0.20%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MS currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Morgan Stanley’s Q3 Price Performance & Valuation Analysis

In the third quarter, Morgan Stanley’s share performance was weak as the operating backdrop turned unfavorable. The stock underperformed the industry as well as JPMorgan (JPM Quick QuoteJPM - Free Report) , while outpacing Goldman Sachs (GS Quick QuoteGS - Free Report) . 

3Q26 Price Performance
 

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Goldman and JPMorgan are scheduled to announce third-quarter 2026 numbers on Oct. 13.  Over the past seven days, the Zacks Consensus Estimate for Goldman’s third-quarter 2026 earnings has been revised lower to $12.90. The consensus estimate for JPMorgan’s third-quarter 2026 earnings has been revised upward to $5.94 over the past week. 

In terms of valuation, MS shares appear expensive relative to the industry. The stock is, at present, trading at the forward 12-month price/earnings (P/E) of 14.45X. This is above the industry’s 12.61X, reflecting a stretched valuation.

P/E F12M
 

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Also, MS stock is trading at a premium compared with JPMorgan and Goldman. At present, JPMorgan has a forward P/E of 13.28X, while Goldman’s forward P/E is 12.30X.

Morgan Stanley’s Investment Thesis

Morgan Stanley’s alliance with Mitsubishi UFJ Financial Group strengthens its competitive position in Japan through integrated research, sales, execution and underwriting capabilities. Its expanding global presence and continued investments in regional leadership position the company to capitalize on growing capital markets and wealth management opportunities across Asia, supporting market share gains.

Meanwhile, Morgan Stanley continues to diversify its revenue streams by expanding its wealth and asset management businesses, reducing dependence on capital markets. Strategic acquisitions, including Eaton Vance, E*TRADE Financial, Shareworks and EquityZen, have strengthened its offerings and improved earnings stability. As of June 30, 2026, combined client assets across wealth and asset management reached a record $10 trillion, reflecting robust momentum across its platforms.

Further, Morgan Stanley’s strong liquidity and earnings position support consistent shareholder returns. In July, the company raised its quarterly dividend 15% to $1.15 per share. Additionally, the board reauthorized a $20 billion share repurchase program. These efforts underscore management’s commitment to disciplined capital allocation, organic growth and shareholder value creation.

However, Morgan Stanley remains vulnerable to trading revenue volatility, driven by fluctuations in market conditions, client activity and investor sentiment. Although trading performance has improved since 2023, supported by heightened volatility and active client participation, sustaining this momentum could be challenging. Moderating volatility, slower issuance and cautious investor positioning may weigh on revenues. Meanwhile, despite restructuring initiatives, Morgan Stanley’s expenses have continued to rise, registering a five-year (ended 2025) CAGR of 7.4%, with the trend persisting in the first half of 2026. Continued investments in technology, AI and data infrastructure are expected to keep costs elevated.

How to Approach MS Stock Ahead of Q3 Earnings?

Morgan Stanley’s expanding wealth and asset management franchises, strategic acquisitions, strong global presence and shareholder-friendly capital distributions support its long-term growth prospects. Its alliance with Mitsubishi UFJ Financial Group further strengthens its competitive position in Asia. However, trading revenue volatility, rising operating expenses and continued investments in technology and AI could pressure near-term profitability.

Hence, investors may prefer to await Morgan Stanley’s upcoming third-quarter results before initiating fresh positions, as the release could offer greater clarity on capital markets activity, expense trends and earnings prospects. Existing shareholders may consider retaining their positions, given the company’s diversified revenue streams and growth potential.