Major U.S. banks reported this week that investment banking activity is strengthening across the board, signaling a recovery in dealmaking that has been elusive for several years. Across the six largest U.S. banks, investment banking fees jumped an average of 45% in the second quarter versus a year earlier, with Morgan Stanley posting the largest percentage increase among them.
Goldman Sachs highlighted the depth of the pickup on an analyst call, saying its backlog climbed to its highest level in five years and marked the firm's second-highest level on record, supported by a record advisory backlog. "Even with very strong investment banking revenues this quarter, our backlog increased to its highest level in five years and its second highest level on record, underpinned by a record advisory backlog," Goldman Sachs CEO David Solomon said.
Industry executives traced the prior slowdown to several factors that had discouraged companies from pursuing deals and public listings: an extended period of elevated interest rates, heightened market volatility and intensified regulatory scrutiny. More recently, developments such as conflict in the Middle East and uncertainty about AI's economic effects prompted a temporary pause in some activity, but neither proved sufficient to halt the broader resurgence.
IPOs proved central to reopening the public markets. U.S. initial public offerings raised a record $104.8 billion in the second quarter, according to Renaissance Capital, driven in part by the historic listing of SpaceX. The revival in IPO activity also reached sponsor-backed firms, allowing private equity and venture capital owners to return holdings to public markets and restore an important exit channel that had been largely dormant while public listings were limited.
Executives at large banks described healthy pipelines going into the second half. "As we enter the second half, the pipeline looks healthy," Citigroup CEO Jane Fraser said, adding that the bank plans to invest in talent to fill gaps that would help it win market share, including within mergers and acquisitions.
Wall Street is also bracing for potential large listings from two AI-focused companies that have filed confidentially for U.S. IPOs. Reuters has reported the listings could come as soon as this year, and analysts cited in filings and commentary anticipate each could be valued at about $1 trillion. Mega IPOs of that scale typically generate very large fees for banks and can lead to extended relationships spanning capital markets work and M&A advisory.
Dealmaking volumes beyond IPOs have also accelerated. Announced global mergers and acquisitions volumes have topped $3 trillion so far in 2026, rising more than 40% from a year earlier, according to Dealogic. Bank of America emphasized wide client engagement across multiple services, with Chief Financial Officer Alastair Borthwick noting activity spanning capital markets, strategic transactions and liquidity management.
Technology companies have been especially active, with AI firms and the businesses that supply computing infrastructure for AI driving much of the 2026 momentum. Activity rose in other sectors as well, including healthcare, utilities and energy, reflecting a broad-based bid for transactions across the economy.
"The pipeline remains quite robust, and the current activity levels seem to be encouraging more activity," JPMorgan CFO Jeremy Barnum said. Analysts at Morningstar described the phase as an "investment banking super-cycle" with room to continue, and they do not expect a material contraction until 2028 or later.
Market participants pointed to the scale of the recent results. "Investment banking divisions experienced their strongest fee-generating quarter since the peak of 2021," said David Wagner, head of equities and portfolio manager at Aptus Capital Advisors. Wagner noted that major investment banks comfortably exceeded Wall Street profit forecasts by wide margins, which he said reflected one of the most bullish dealmaking environments the sector has seen in years.
Expectations for stronger investment banking profits have supported gains in bank stocks this year. Yet analysts and investors noted that share price appreciation has been more measured than in some past cycles because of concerns about high valuations for bank equities.
Bottom line: The combination of a record quarter for IPO proceeds, a surge in announced M&A volumes and fuller advisory pipelines has reawakened investment banking across the largest U.S. firms. While geopolitical and technological uncertainties prompted short-term caution earlier this year, they have not prevented a broad rebound in deal activity.