Morgan Stanley (MS) AI Stock Analysis

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Morgan Stanley

(NYSE:MS)

Select Model

Neutral 69 (OpenAI - 5.2)

Rating:69Neutral

Price Target:

$170.00

▲(9.18% Upside)

Action:DowngradedDate:02/20/26

The score is driven primarily by mixed fundamentals: strong revenue/profitability momentum is offset by highly volatile/mostly negative operating and free cash flow and leverage sensitivity. The earnings call adds support via strong execution, capital strength, and shareholder returns, while technicals are mildly bearish near-term and valuation is reasonable with a supportive dividend yield.

Positive Factors

Wealth management scale & fee flows

Large, growing wealth franchise drives durable, fee‑based revenue and high margins. Consistent net new assets and advisor-led flows increase recurring asset‑based fees, deepen client relationships, and expand cross‑sell opportunities (lending, deposits, advisory), reducing reliance on volatile trading income.

Strong capital & disciplined allocation

A robust CET1 buffer and demonstrated buybacks/dividend growth indicate capacity to support shareholder returns while retaining flexibility for stress or opportunistic investments. Excess capital underpins regulatory resilience, funds strategic tech/M&A choices, and enables patient capital allocation over economic cycles.

Investment management AUM & alternatives growth

Growing AUM and durable long‑term inflows strengthen asset‑management fee stability and diversify revenue via scaled passive/quant and rapidly expanding alternatives. Higher alternatives AUM supports stickier management fees and performance capacity, improving long‑term revenue mix and margin resilience.

Negative Factors

Weak, volatile cash generation

Repeated negative or volatile operating and free cash flows reduce earnings quality and constrain true financial flexibility. Reliance on accounting earnings rather than cash undermines ability to sustain buybacks, absorb losses, or invest without tapping capital markets, raising medium‑term funding and operational risk.

Elevated leverage & reporting inconsistency

Historically high leverage increases vulnerability in stress scenarios and limits maneuverability under adverse market conditions. An inconsistent 2025 debt presentation raises transparency concerns, complicating assessment of true leverage and regulatory capital headroom for M&A or capital returns.

Market‑sensitive revenue and mark‑to‑market volatility

Significant exposure to market‑driven businesses (markets, fixed income, performance fees) produces cyclical revenue and occasional markdowns, making earnings and margins less predictable. This structural sensitivity limits revenue durability and complicates forward planning across investment cycles.

Morgan Stanley (MS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$247.23B

Dividend Yield2.14%

Average Volume (3M)7.64M

Price to Earnings (P/E)16.5

Beta (1Y)1.51

Revenue Growth7.22%

EPS Growth48.18%

CountryUS

Employees81,000

SectorFinancial

Sector Strength70

IndustryFinancial - Capital Markets

Share Statistics

EPS (TTM)2.68

Shares Outstanding1,587,860,200

10 Day Avg. Volume7,175,450

30 Day Avg. Volume7,644,508

Financial Highlights & Ratios

PEG Ratio0.58

Price to Book (P/B)2.50

Price to Sales (P/S)2.43

P/FCF Ratio6.05

Enterprise Value/Market Cap2.49

Enterprise Value/Revenue5.34

Enterprise Value/Gross Profit9.36

Enterprise Value/Ebitda23.09

Forecast

1Y Price Target

$186.58

Price Target Upside19.83% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

EPS Forecast (FY)11.25

Revenue Forecast (FY)$76.35B

Morgan Stanley Business Overview & Revenue Model

Company DescriptionMorgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals in the Americas, Europe, the Middle East, Africa, and Asia. It operates through Institutional Securities, Wealth Management, and Investment Management segments. The Institutional Securities segment offers capital raising and financial advisory services, including services related to the underwriting of debt, equity, and other securities, as well as advice on mergers and acquisitions, restructurings, real estate, and project finance. This segment also provides sales and trading services, such as sales, financing, prime brokerage, and market-making services in equity and fixed income products consisting of foreign exchange and commodities; corporate and commercial real estate loans, which provides secured lending facilities and financing for sales and trading customers, and asset-backed and mortgage lending; and wealth management services, investment, and research services. The Wealth Management segment offers financial advisor-led brokerage and investment advisory services; self-directed brokerage services; financial and wealth planning services; workplace services, including stock plan administration; annuity and insurance products; securities-based lending, residential real estate loans, and other lending products; banking; and retirement plan services to individual investors and small to medium-sized businesses and institutions. The Investment Management segment provides equity, fixed income, liquidity, and alternative/other products to benefit/defined contribution plans, foundations, endowments, government entities, sovereign wealth funds, insurance companies, and third-party fund sponsors and corporations through institutional and intermediary channels. Morgan Stanley was founded in 1924 and is headquartered in New York, New York.

How the Company Makes MoneyMorgan Stanley makes money primarily by earning fees and commissions for advice and execution services, and by generating interest and trading-related revenue from its financing and markets activities. Key revenue streams include: (1) Wealth Management: revenue from asset-based fees on advisory programs and managed accounts, commissions and transaction fees on brokerage activity, net interest income earned on client cash balances and margin lending, and fees tied to banking and lending products offered to wealth clients. (2) Investment Management (asset management): management and performance fees for managing investment funds and separate accounts across traditional and alternative strategies, with revenue largely linked to assets under management and investment performance (where applicable). (3) Institutional Securities / Investment Banking: advisory fees from mergers and acquisitions and other strategic advisory mandates, and underwriting fees from equity and debt capital markets transactions where Morgan Stanley helps clients issue and distribute securities. (4) Institutional Securities / Markets: sales and trading revenue from market-making and client facilitation in equities, fixed income, currencies, commodities, and derivatives; financing revenues such as securities lending and prime brokerage; and net interest income associated with financing client positions. Earnings are influenced by market conditions (volatility, issuance activity, and client trading volumes), interest rates (affecting net interest income on loans and deposits/cash balances), asset values (affecting fee-bearing assets and assets under management), and the scale of its client base. If details about any specific partnerships are required, null.

Morgan Stanley Key Performance Indicators (KPIs)

Any

Net Income Breakdown

Net Income Breakdown
Provides a detailed view of profit sources, illustrating how different operations contribute to the bottom line and financial health.

Chart InsightsMorgan Stanley's Institutional Securities segment shows a recovery in 2025, aligning with the firm's record revenues and strategic focus on capital markets. Wealth Management continues its strong upward trajectory, contributing significantly to client asset growth. Investment Management is stabilizing with strategic expansions like Parametric Solutions. The earnings call highlights robust performance and strategic investments in AI, despite regulatory and geopolitical uncertainties. This positions Morgan Stanley for sustained growth, with a focus on exceeding $10 trillion in client assets and enhancing shareholder returns.

Data provided by:

The Fly

Morgan Stanley Earnings Call Summary

Earnings Call Date:Jan 15, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:Apr 15, 2026

Earnings Call Sentiment Positive

The call conveyed strong, broad-based execution: record revenues and EPS, meaningful asset and flow growth in wealth and investment management, market share gains in institutional securities, a robust capital position (15% CET1 and >300 bps excess), and ongoing investment in AI, technology and strategic initiatives. Near-term challenges were acknowledged—DCP accounting transition and transitional costs, softer pockets in fixed income and commodities, mark-to-market volatility in some investment management strategies, and macro/regulatory uncertainties—but these were framed as manageable within the firm’s capital and operating plans. On balance the positive operational and financial momentum substantially outweighed the listed headwinds.

Q4-2025 Updates

Positive Updates

Record Revenue and Earnings

Full-year revenues reached a record $70.6 billion and fourth-quarter revenues were $17.9 billion. Full-year EPS was $10.21 and Q4 EPS was $2.68. ROTCE was 21.6% for the year and 21.8% in the quarter. The firm delivered operating leverage while investing for growth, with the full-year efficiency ratio improving to 68.4%.

Wealth Management Scale, Flows and Margin Expansion

Wealth delivered record full-year revenues (~$31.8–$32.0 billion) and a 29% reported margin for 2025; Q4 revenues were $8.4 billion with a 31.4% reported margin (DCP headwind noted). Net new assets were $356 billion for the year, fee-based flows were $160 billion (with fee-based flows >$40 billion for three consecutive quarters), and advisor-led assets from workplace/E*TRADE totaled a record $99 billion (vs. ~$60B historical annual average). Bank lending balances grew $7 billion sequentially to $181 billion; total period deposits were $408 billion and net interest income was $2.1 billion in Q4.

Institutional Securities and Investment Banking Momentum

Institutional Securities had record full-year revenues of $33.1 billion and Q4 revenues of $7.9 billion. Investment banking revenues were $7.6 billion for the year and Q4 investment banking revenues rose 47% year-over-year to $2.4 billion. Equity revenues were a record $15.6 billion for the year, driven by share gains, prime brokerage growth and increased client engagement; fixed income generated $8.7 billion for the year, and the firm reports durable wallet-share gains across underwriting and markets.

Investment Management AUM Growth and Positive Flows

Investment Management reported total revenues of $6.5 billion, record AUM of $1.9 trillion, and full-year long-term net inflows of $34 billion. The business generated six consecutive quarters of positive long-term net flows; long-term net inflows were ~$2 billion in Q4. Parametric scaled to $685 billion AUM and alternatives grew to $270 billion (more than doubled in five years).

Strong Capital Position and Shareholder Returns

Standardized CET1 ratio ended the year at 15% with over 300 basis points of excess capital. The firm returned capital via $4.6 billion of common stock buybacks in 2025 (including $1.5 billion in Q4) and raised its quarterly dividend (incrementally over four years) to $1.00 per share. Management emphasized disciplined capital allocation (dividends, opportunistic buybacks, and investments) and expects to remain patient on M&A.

International and Strategic Growth

25% of revenues came from outside the U.S.; EMEA revenues grew ~40% and Asia revenues grew ~50% over the last two years. The firm highlighted global footprint (30,000 employees outside the U.S.), strategic acquisitions and partnerships (EquityZen, Carta, Zero Hash) and ongoing investment in AI and technology to drive future efficiency and revenue opportunities.

Negative Updates

DCP Accounting Impact and Transition Costs

Deferred compensation plan (DCP) dynamics negatively impacted the quarterly wealth margin by ~95 basis points. Management will transition economic hedges for DCP obligations to derivatives and increase the cash component of adviser compensation to reduce accounting-driven volatility; these changes will incur transitional costs and may cause near-term P&L noise.

Fixed Income and Commodities Weakness

Fixed income macro and micro results declined in Q4 versus the prior year, reflecting lower FX volatility and weaker corporate credit performance. Commodities revenues fell materially versus last year's Q4, primarily due to lower power and gas revenues after several large structured transactions benefited the prior-year quarter.

Performance and Mark-to-Market Volatility in Investment Management

Performance-based income in Q4 was modest ($71 million) as gains in U.S. private equity and private credit were offset by markdowns in an infrastructure fund, illustrating portfolio-level volatility that can affect quarter-to-quarter revenue recognition.

Macro, Geopolitical and Regulatory Uncertainties

Management emphasized the presence of geopolitical 'swirl', market uncertainties and a complicated macro backdrop that could create headwinds. The regulatory capital framework has normalized and, while CET1 is healthy (15%), future regulatory changes (Basel/GSIB/SRB calibrations) could alter capital deployment plans.

Tax and Quarterly Volatility Expectations

The firm's effective tax rate was 21.5% for the full year and 23.2% in Q4; management expects a 2026 tax rate between 22–23% and noted potential quarterly volatility in the reported tax rate.

Company Guidance

The firm’s guidance was largely conservative and execution‑focused: management is keeping its firm‑wide targets unchanged while saying it will “execute at or above” those goals in a welcoming market and deliver “higher lows” in tougher environments; near‑term financial guidance calls for Q1 net interest income roughly flat Q/Q with NII expected to trend higher through 2026 (assuming the forward curve, incremental loan growth and deposit mix), a 2026 tax rate of 22–23%, and a Q1 transition of DCP economic hedges to derivatives plus an increased cash component of adviser compensation. Capital and allocation guidance: CET1 ended 2025 at 15% with over 300 bps of excess capital, continued prudent dividend growth (quarterly dividend now $1.00 after four consecutive 7.5¢ increases) and opportunistic buybacks (FY2025 repurchases $4.6B, including $1.5B in Q4). Management anchored this guidance with 2025 performance metrics: total client assets $9.3T, FY revenues $70.6B (Q4 $17.9B), EPS $10.21 (Q4 $2.68), ROTCE 21.6% (Q4 21.8%), efficiency ratio ~68.4% for the year; business‑level metrics cited include Wealth net new assets $356B and fee‑based flows $160B (Wealth revenues $31.8B, 29% margin; Q4 Wealth $8.4B, 31.4% margin), AUM $1.9T, Institutional Securities revenues $33.1B (Investment Banking $7.6B; Equities $15.6B; Fixed Income $8.7B), standardized RWAs $553B, total spot assets $1.4T, deposits $408B, bank lending balances $181B and Q4 NII $2.1B.

Morgan Stanley Financial Statement Overview

Summary

Income statement strength (Score 78) shows meaningful revenue step-up since 2023 and improving profitability, but it’s tempered by balance-sheet leverage risk/consistency issues (Score 64, including an inconsistency in reported 2025 debt vs prior years) and especially weak/volatile cash generation (Cash Flow Score 32 with mostly negative operating and free cash flow), which lowers earnings quality and financial flexibility.

Income Statement

Positive

Revenue has stepped up meaningfully since 2023, reaching $116.1B in 2025, with profitability also improving (net margin ~14.5% in 2025 vs ~10.3% in 2023). Operating profitability is solid for the space (2025 operating margin ~18.9%), though still below the stronger 2021 levels (net margin ~26.0% and higher operating profitability), indicating some cyclicality/normalization from peak conditions. Overall, the income statement shows good scale and improving momentum, but with a history of margin volatility.

Balance Sheet

Positive

Equity is sizable and growing ($111.6B in 2025 vs $99.0B in 2023) and returns on equity are healthy (about 15.1% in 2025 vs 9.2% in 2023). However, leverage appears elevated in most years (debt-to-equity roughly ~3.1–3.4x from 2022–2024), which is a key balance sheet risk factor in stressed markets. The 2025 debt showing as $0 (and 0.0x debt-to-equity) is inconsistent with prior years, so leverage trends should be interpreted cautiously based on the provided data.

Cash Flow

Negative

Cash generation is volatile and frequently negative, with operating cash flow negative in 2020, 2022, 2023, and 2025, and free cash flow negative in every year except 2021. Even in 2024, operating cash flow was only slightly positive ($1.36B) while free cash flow remained negative (-$2.1B). This uneven cash profile weakens financial flexibility and makes reported earnings quality less consistent when viewed through cash conversion.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	114.98B	103.14B	88.29B	62.48B	57.78B
Gross Profit	65.62B	57.36B	50.13B	49.93B	56.41B
EBITDA	26.61B	22.76B	16.07B	18.09B	23.88B
Net Income	16.86B	13.39B	9.09B	11.03B	15.03B
Balance Sheet
Total Assets	1.42T	1.22T	1.19T	1.18T	1.19T
Cash, Cash Equivalents and Short-Term Investments	539.97B	401.59B	461.89B	467.86B	500.35B
Total Debt	475.56B	360.49B	339.04B	308.75B	305.36B
Total Liabilities	1.31T	1.11T	1.09T	1.08T	1.08T
Stockholders Equity	111.63B	104.51B	99.04B	100.14B	105.44B
Cash Flow
Free Cash Flow	46.10B	-2.10B	-36.95B	-9.47B	31.66B
Operating Cash Flow	49.00B	1.36B	-33.54B	-6.40B	33.97B
Investing Cash Flow	-144.22B	-29.46B	-3.08B	-11.63B	-49.90B
Financing Cash Flow	98.31B	46.76B	-2.73B	22.71B	41.55B

Morgan Stanley Technical Analysis

Technical Analysis Sentiment

Negative

Last Price155.70

Price Trends

50DMA

174.83

Negative

100DMA

171.85

Negative

200DMA

157.88

Negative

Market Momentum

MACD

-5.32

Positive

RSI

37.62

Neutral

STOCH

21.15

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MS, the sentiment is Negative. The current price of 155.7 is below the 20-day moving average (MA) of 165.39, below the 50-day MA of 174.83, and below the 200-day MA of 157.88, indicating a bearish trend. The MACD of -5.32 indicates Positive momentum. The RSI at 37.62 is Neutral, neither overbought nor oversold. The STOCH value of 21.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MS.

Morgan Stanley Risk Analysis

Morgan Stanley disclosed 75 risk factors in its most recent earnings report. Morgan Stanley reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Morgan Stanley Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MS	69 Neutral	$247.23B	16.54	15.45%	2.14%	7.22%	48.18%
SCHW	69 Neutral	$164.06B	20.00	17.91%	1.07%	5.90%	66.60%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
JPM	67 Neutral	$771.78B	15.75	15.95%	1.79%	1.89%	12.32%
BAC	66 Neutral	$337.73B	13.23	10.19%	1.93%	0.15%	33.84%
GS	64 Neutral	$235.85B	16.00	13.81%	1.55%	2.31%	44.49%
C	58 Neutral	$187.79B	21.83	6.71%	1.94%	-0.62%	105.57%

* Financial Sector Average

Performance Comparison

Morgan Stanley

157.83

42.81

37.22%

BAC

Bank of America

47.28

6.55

16.07%

Citigroup

107.71

39.27

57.38%

JPM

JPMorgan Chase

286.89

56.64

24.60%

SCHW

Charles Schwab

93.93

17.31

22.60%

Goldman Sachs Group

807.04

266.46

49.29%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 20, 2026