Major Wall Street banks including Goldman Sachs, JPMorgan, Citigroup, and Wells Fargo are preparing to report third-quarter earnings as the revenue boost from major listings like SpaceX begins to fade. According to Bloomberg Intelligence analyst Herman Chan, investment banking fee revenue in the fourth quarter now heavily depends on Anthropic's anticipated initial public offering (IPO).
SpaceX Underwriting Drives First-Half Gains
The impact of mega-cap deals was evident in second-quarter results, particularly for Morgan Stanley, which served as a lead underwriter for SpaceX. The bank posted $851 million in second-quarter equity underwriting revenue, marking a sharp increase from $500 million in the prior-year period.
Furthermore, Morgan Stanley's wealth management division recorded a record $148 billion in net new client assets. Chief Financial Officer Sharon Yeshaya noted that over half of these net asset inflows were directly tied to IPO-related transactions. However, broader momentum has slowed. Data from the London Stock Exchange Group (LSEG) reveals that global investment banking fees dropped 19% in the third quarter compared to the second quarter, though total fees remain up 12% across the first nine months of the year. Financial institution revenue remains sensitive to shifting broader conditions, especially as global bank stocks face balance sheet pressure.
AI Delays Threaten Fourth-Quarter Fee Pipeline
Looking ahead, banks are counting on Anthropic to fuel fourth-quarter advisory revenues. Bloomberg reported in June that Goldman Sachs and Morgan Stanley secured lead underwriting roles for the Anthropic listing, with JPMorgan also participating.
However, market volatility and valuation concerns pose immediate risks to the IPO schedule. The Nasdaq 100 dropped by more than 300 points last Thursday following a report detailing lower revenue at OpenAI. The Financial Times reported that the revenue discrepancy stems from how OpenAI and Anthropic account for sales executed through cloud partners. Beyond equity listings, banks earn substantial fee revenue by structuring debt packages and securitizations for AI data center developments, an asset class highlighted by SpaceX's massive debt package financing. If corporate AI spending cools, investment banking fees and share prices for firms like Goldman Sachs and Morgan Stanley could come under pressure.
Key Takeaways
- Morgan Stanley generated $851 million in Q2 equity underwriting revenue and $148 billion in net new wealth assets from deals like SpaceX.
- Global investment banking fees fell 19% quarter-over-quarter, according to LSEG data.
- The Nasdaq 100 slid over 300 points last Thursday after accounting discrepancies lowered OpenAI revenue expectations.
- Goldman Sachs, Morgan Stanley, and JPMorgan are positioned to lead the upcoming Anthropic IPO in Q4.
Why It Matters
The reliance of top investment banks on a small cluster of mega-cap AI listings highlights underlying fragility in capital markets. If valuation concerns or accounting disputes around cloud revenue delay Anthropic's public debut, fourth-quarter fee income will suffer across Wall Street. Investors should watch whether credit quality remains pristine or if debt financing for data center expansion slows alongside public equity offerings.
