3 Must-Buy Investment Bank Behemoths After Solid Q4 Earnings

Industry Overview - The investment bank industry thrived in 2025 due to increased client activities, a rebound in underwriting and advisory businesses, a solid trading business, and significant application of artificial intelligence (AI) enhancing long-term efficiency [1] - The Zacks-defined Financial – Investment Bank industry ranks in the top 21% of the Zacks Industry Rank, with a return of 22.9% over the past year and a year-to-date return of 2.2%, indicating potential outperformance in the next three to six months [2] Company Analysis Goldman Sachs Group Inc. (GS) - Goldman Sachs is focusing on core strengths in investment banking and trading while restructuring and reducing its consumer banking footprint [4] - The company is expanding in the private equity credit market to diversify its revenue base, with a solid liquidity profile supporting capital distribution activities [5] - Expected revenue and earnings growth rates for Goldman Sachs are 8.6% and 10.3%, respectively, for the current year, with a 2.3% improvement in the earnings consensus estimate over the last 30 days [6][8] Citigroup Inc. (C) - Citigroup has seen benefits from increased net interest income and lower provisions, with transformation initiatives positioning revenues for growth [9] - The expansion into private credit enhances diversification, supported by a strong capital base for shareholder returns, with an expected return on tangible common equity of 10-11% by 2026 [10] - Expected revenue and earnings growth rates for Citigroup are 5.4% and 28%, respectively, with a 1% improvement in the earnings consensus estimate over the last 30 days [12] Morgan Stanley (MS) - Morgan Stanley's focus on wealth and asset management, along with strategic alliances and acquisitions, is expected to drive top-line growth [13] - The acquisition of EquityZen will allow Morgan Stanley to tap into the growing private markets landscape, supported by a strong investment banking pipeline [13] - Expected revenue and earnings growth rates for Morgan Stanley are 6% and 8.4%, respectively, with a 5.1% improvement in the earnings consensus estimate over the last 30 days [15]