MS · Q2 2026 Earnings

Bullish

Morgan Stanley

Reported July 15, 2026

30-second summary

Morgan Stanley printed Q2 revenue of $21.35B (+27% YoY, +3.7% QoQ) and diluted EPS of $3.46, with Institutional Securities exploding to $11.04B (+44% YoY) and Asia +71% extending the multi-quarter outperformance. The $10T combined firm client asset milestone was cleared — Wealth client assets $8.08T + IM AUM $2.00T = $10.09T — one quarter ahead of the bull-case timeline. The one anomaly worth flagging: management issued zero quantitative forward guidance this quarter, a hard pullback from the "measured confidence" NII and tax-rate markers offered in Q1. Combined with no available transcript, the print speaks for itself while the narrative goes dark.

Headline numbers

EPS

Q2 FY2026

$3.46

+18.1% vs est.

Revenue

Q2 FY2026

$21.35B

+27.0% YoY

+8.6% vs est.

Operating margin

Q2 FY2026

34.0%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$21.35B	$16.79B	+27.1%	$20.58B	+3.7%
EPS	$3.46	$2.13	+62.4%	$3.43	+0.9%
Operating margin	34.0%	28.0%	+600bps	34.0%	+0bps

Guidance

No quantitative guidance provided this quarter; prior-quarter NII and tax rate guidance remain outstanding without explicit reaffirmation or revision.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Net Interest Income (NII)	Q2 FY2026	modest increase in the second quarter compared to the first	qualitative disclosure only	in-line with qualitative expectation	Met

Segment performance

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Institutional Securities	$11.04B	$7.643B	+44.4%
Wealth Management	$8.856B	$7.764B	+14.1%
Investment Management	$1.646B	$1.552B	+6.1%

Capital & returns

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Return on Average Common Equity	20.7%	13.9%	—
Return on Average Tangible Common Equity	26.6%	18.2%	—
CET1 Ratio (Advanced Approach)	16.2%	—	—
Tier 1 Capital Ratio (Advanced Approach)	17.9%	17.6%	—
Total Deposits	$446.1B	$389.4B	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Americas	$15.046B	—	+22.0%
EMEA	$2.372B	—	+11.0%
Asia	$3.93B	—	+71.0%
Wealth Management Total Client Assets	$8.084T	$6.492T	—
Wealth Management Net New Assets	$148.1B	—	—
Investment Management Total AUM	$2.004T	—	—

Management tone

No transcript available for Q2; the tone read below is inferred from the press release framing and cross-quarter context. A full tone update will follow when call materials are captured.

Q2 "earnings durability" → Q3 "capital markets flywheel" → Q4 "higher plane through the cycle" → Q1 "measured confidence" → Q2 (silent on forward markers).

The single observable tone shift this quarter is what's missing. Q1 gave three specific forward markers — Q2 NII "modest sequential increase," FY NII "build over the course of the year," FY tax rate 22-23%. Q2's press release offers none of them, neither reaffirming nor revising. For a management team that has spent four quarters progressively integrating macro tail risks into a bull thesis, going silent on forward framing during the best print of the franchise is a choice. Two plausible reads: (a) management is holding fire for a formal H1 review that will raise targets — the Q4 "later in the year if clearly passed through" commitment now has two consecutive datapoints clearing the bar; (b) something in the forward book — deposit mix, rate path, deal pipeline — no longer supports the "build over the course of the year" NII framing and management chose silence over revision. The transcript will settle which. Until then, the print does the talking and the silence does the hedging.

Answers to last quarter's watch list

Whether IB momentum holds at $10B+ in Q2 or fades to the Q4 $7.9B baseline. Institutional Securities printed $11.04B (+44% YoY, +3% QoQ) — not a fade, an acceleration. Two consecutive quarters $2B+ above the durability threshold reframe Q1 as a floor, not a peak. The "January window pull-forward" bear case is dead.

Resolved positively

$10T combined firm client asset milestone in Q2. Cleared. $8.08T Wealth + $2.00T IM = $10.09T, driven by $148.1B of Wealth NNA (record cadence) plus market beta. The milestone came one quarter earlier than the Q1 brief's "Q2/Q3 range.".

Resolved positively

Q2 Wealth NII delivery vs. "modest sequential increase" guide. Wealth Management NII of $2,254M (+4% QoQ from $2,170M in Q1) is consistent with the prior "modest sequential increase" framing.

Resolved positively

Whether management formally raises ROTCE targets at H1 review. Not addressed in the press release. Q2's 26.6% ROTCE plus Q1's 27.1% delivers two consecutive quarters 660bps+ above target — the Q4 "if clearly passed through" bar is now decisively cleared. Management's silence on forward markers may indicate a target refresh is being staged for a later disclosure.

Not resolved

Investment Management revenue inflection. Resolved. IM printed $1.65B (+6% YoY) — the -4% Q1 print was the trough, not a structural decoupling. AUM crossed $2.00T for the first time.

Resolved positively

Asia sustainability after +43%. Not just sustained — accelerated to +71% YoY. Asia is now $3.93B, up from $3.35B in Q1.

Resolved positively

What to watch into next quarter

Whether Q3 forward guidance returns in either the press release or the call. The absence of quantitative markers this quarter is the single most notable non-event. A return to NII and tax-rate guidance in Q3 signals the silence was tactical; a second quarter of silence signals a structural change in disclosure posture worth pricing in.

Institutional Securities holding above $10B. Two consecutive $10B+ prints set a hard comp. A Q3 print in the $9.5-10.5B range validates the run-rate; below $9B reframes H1 as an unusual environment rather than a new baseline.

Wealth NNA cadence. $148.1B is the highest print in the dataset. Watch whether Q3 sustains above $100B or fades toward the ~$80B base rate — the former confirms structural funnel expansion; the latter suggests H1 was pull-forward.

Whether ROTCE targets get formally raised at Q3 or full-year review. Two quarters at 26-27% against a 20% target puts the credibility of the "compound organically" framing under pressure. A third clean quarter without a target refresh becomes the story.

Asia normalization vs. sustainability. +71% is a print-of-the-year number; a Q3 fade to the +20-30% range confirms the multi-year story is real but volatile. A sustained +50%+ recasts Asia as the primary geographic growth engine.

Deposit trajectory ($446.1B in Q2 vs. $428.0B Q1). Continued deposit build supports the FY26 NII recovery thesis even without explicit guidance.

Sources

Morgan Stanley Q2 2026 Financial Supplement, SEC filing — https://www.sec.gov/Archives/edgar/data/895421/000089542126000207/a2q26msfinancialsupplement.htm

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