JPMorgan believes the market is underappreciating the positive impact that potential mega-IPOs, like that of SpaceX, could have on investment banking performance, prompting a short-term tactical buy signal from the firm.
The bank's sales specialists, Rob Dwyer and Ayano Tsunoda, note that a more volatile market combined with a busy schedule of new stock listings could lead to significant revenue gains for investment banks, an upside they feel is not yet fully reflected in share prices. They have temporarily raised their trading ratings for Goldman Sachs and Morgan Stanley to "outperform."
With Goldman Sachs set to report quarterly results on July 15 and Morgan Stanley on July 16, JPMorgan anticipates both will deliver strong earnings. It is important to note that this rating adjustment is a short-term tactical move, with the formal long-term ratings for both stocks remaining at "neutral."
The Ripple Effect of Major Listings
JPMorgan analysts point out that as lead underwriters for a potential SpaceX IPO, Goldman Sachs and Morgan Stanley would directly benefit from associated underwriting fees.
More significantly, the large-scale listings expected this year are creating a "multiplier effect"—the activity from IPOs and capital raising deals stimulates growth in secondary market trading and related business areas. Dwyer and Tsunoda suggest this effect "is a critical driver for the future revenue pool, difficult to quantify precisely from the outside, and may be underestimated by the market."
The MSCI World Index has risen approximately 10% year-to-date, providing a favorable backdrop for new issuances with strong equity market returns.
Valuations and Growth Momentum
From a performance perspective, the first quarter of 2026 was already the best quarter on record for investment bank equity sales & trading, and JPMorgan expects this momentum to continue into the second quarter. Dwyer and Tsunoda forecast equity trading revenue to increase 21% year-over-year, FICC trading revenue to grow 7%, and overall markets business revenue to rise 14%.
Furthermore, volatility in commodity markets driven by Middle East tensions, where Goldman Sachs and Morgan Stanley are deeply involved, has led to a notable increase in hedging demand, providing additional support for the trading businesses of both banks.
On a comparative basis, US investment bank valuations are not cheap. Goldman Sachs and Morgan Stanley currently trade at higher price-to-earnings multiples in the teens, while European peers like Barclays and Deutsche Bank trade at mid-single-digit P/E ratios.
However, JPMorgan notes that US investment banks benefit from superior earnings growth momentum, supported by robust trading volumes on domestic exchanges. Their balance sheets continue to expand in financing activities, and when combined with the multiplier effect from IPOs feeding into financing and secondary trading, they hold a clear competitive advantage.
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