US bank fees jump 45% as AI-driven M&A crosses $3 trillion
A 45% jump in second-quarter investment banking fees at top U.S. lenders signals a durable dealmaking recovery, driven by a surge in artificial intelligence-related M&A and the looming return of mega-IPOs.
Investment banking fees at the six largest U.S. banks surged 45% year-over-year in the second quarter, with Morgan Stanley posting the strongest growth among its peers. The results confirm that a broad-based recovery in dealmaking has finally materialized after years of suppressed activity. Companies had previously shelved transactions due to a toxic combination of high interest rates, market uncertainty, and tighter regulatory oversight.
The most immediate driver of this rebound is a sharp acceleration in global mergers and acquisitions. Announced deal volumes have surpassed $3 trillion so far in 2026, representing a more than 40% increase from the same period last year, according to Dealogic. Technology companies are at the epicenter of this activity, particularly businesses focused on artificial intelligence, cloud infrastructure, and semiconductor supply chains.
Crucially, this transactional momentum is no longer confined to the technology sector. Major Wall Street banks are reporting stronger client engagement across capital markets, strategic transactions, and liquidity management. Rising deal volumes in healthcare, utilities, and energy suggest corporate executives across the broader economy are regaining the confidence to deploy capital.
Simultaneously, the reopening of public equity markets is providing a vital exit route for private equity and venture capital firms that had been forced to hold portfolio companies longer than intended. That logjam is now clearing, headlined by potential mega-listings from Anthropic and OpenAI, which have reportedly filed confidentially for IPOs. Analysts estimate valuations of around $1 trillion each for the AI-focused companies.
For Wall Street, these large-scale listings are among the most profitable assignments available. They generate significant underwriting fees while creating opportunities for future advisory work, including fundraising and acquisitions. The combination of a resurgent M&A market and a strengthening IPO pipeline has already helped major banks surpass profit expectations, cementing investment banking as a reliable earnings driver once again.
Expectations of continued fee income have supported a rally in bank stocks this year, though gains have been somewhat measured due to concerns over elevated valuations. Looking ahead, Morningstar analysts suggest the industry may be entering a prolonged growth cycle that does not experience a significant slowdown until 2028 or later. However, the firm cautioned that the business remains highly sensitive to economic conditions, meaning any reversal in interest rate trends or market sentiment could still test the durability of this revival.
