Investment banking on Wall Street is experiencing a notable resurgence, driven by increased activity in initial public offerings (IPOs), mergers and acquisitions, and debt issuance. The six largest U.S. banks reported a collective 45 percent rise in investment banking fees for the second quarter compared with the same period last year, with Morgan Stanley leading in percentage growth.

Goldman Sachs CEO David Solomon highlighted a significant buildup in deal backlog during a recent analyst call, describing it as the highest in five years and the second highest on record. This surge is supported by a record advisory backlog. The industry had faced challenges in previous years due to elevated interest rates, market volatility, and stricter regulations, which had dampened corporate deal-making and public listings.

Although recent geopolitical tensions in the Middle East and economic uncertainty linked to artificial intelligence briefly slowed momentum, these factors did not halt the overall recovery. U.S. IPOs raised a record $104.8 billion in the second quarter, buoyed notably by the historic public offering of Elon Musk’s SpaceX. Additionally, private equity and venture capital-backed companies have returned to the public markets, reopening a key exit pathway for financial sponsors that had been delayed by a subdued IPO environment.

Citigroup CEO Jane Fraser emphasized a healthy outlook for deal pipelines entering the second half of the year and underscored the bank’s efforts to bolster its workforce to capture more market share, particularly in mergers and acquisitions.

Wall Street is also anticipating landmark public listings from AI-focused companies Anthropic and OpenAI, both of which have filed IPO plans confidentially. Reports suggest these offerings could occur as soon as 2024, with valuations potentially reaching around $1 trillion each. Mega IPOs of this scale typically generate substantial fees and foster ongoing business in capital raising and advisory services.

Globally, announced merger and acquisition volumes have surpassed $3 trillion in 2026, marking a more than 40 percent increase over the previous year, according to Dealogic data. Bank of America CFO Alastair Borthwick noted broad client engagement across capital markets and strategic transactions. The technology sector, driven especially by AI firms and related infrastructure providers, has been at the forefront of this activity, alongside gains in healthcare, utilities, and energy.

JPMorgan CFO Jeremy Barnum described the deal pipeline as robust, with current activity encouraging further deals. Industry analysts have characterized the current period as an "investment banking supercycle," with expectations that significant downturns in the sector may not occur until 2028 or later. While stronger investment banking profits have buoyed bank stock prices this year, the overall gains remain moderate due to concerns over elevated valuations.