Morgan Stanley Barclays 24th Annual Global Financial Services Conference

First of all, thank you. It is a great conference. It is a great time to have the conference and you and Venkat and all the rest. We are really great partners with you. I certainly felt, going into and out of the second quarter, there was a pretty big debate around peak earnings, I think especially around the more capital markets-oriented companies. We feel strongly that there are a number of big thematics around the market, which I will touch on, which all lead us to believe that 2026, as an example, is not peak earnings at Morgan Stanley. Last four quarters were almost $80 billion in revenue. I think that puts us at least in our TAM, what we do, the largest financial advice firm in the world, and across all of our client segments, we see TAM growth and market share growth in every single one.

In that context, we are not at peak, but I think, let me talk a little bit about thematics. I would say the first one is not really a thematic. It is something I am passionate about. I have talked to you about it in the past. I ran strategy, I ran EM, and then I ran capital markets before this. When we look around the world of financial services, we still think the number one growth opportunity in financial services at scale from here is Morgan Stanley Wealth Management. So even though they are number one, the path forward from here is pretty extraordinary, and I think that is driven by at the client level. If we start at the client value level, we think we are the best in the world at delivering value to the client.

At the same time, we've gone from 2.5 million households to over 20 million households. Via the workplace, we are the client acquisition powerhouse that no one has. We not only have the best value once we get the client, our ability has really been transformed. That 2.5 million was 2019, transformed so that we can go grab the clients, and we can service them, both digitally, all the way to the advisor and everything in between.

We still feel, with the help of technology, with the help of the brand, with the help of the investment bank and all that goes with it, I'm sure we'll talk a little bit about SpaceX and a few of these things, that we're still in the early innings of monetizing that growth, that move from 2.5 to 20, but also the events of the summer and some of the IPO activity. We're definitely not focused on 20. We're focused on much higher in terms of relationships in that context. What I would say is to win takes immense focus. The entire leadership team, and my day job is running ISG, and I guess Andy and I, we have night jobs running strategy, but every day the leadership team is focused on winning big in Wealth Management.

That's a comment on our own strategic positioning and where we are in the innings of monetization. I think the second one, I'm sure we'll get in more detail and others will talk about it in other sessions today. We're still of a view that we're relatively early in the M&A capital markets cycle. In 2022, 2023, even parts of 2024, you had activity in M&A and IPOs way off the GDP curve. You have a lot of pent-up demand. Pent-up demand at the corporate level, pent-up demand at the private equity level. I'll go into some more detail, I'm sure, in a second. You've got confidence at the boardroom, and you've got private equity, with a monetization backlog that's big and a dry powder that's big.

In a market context, and we certainly are from a risk perspective and an advice perspective, we're super focused on macro, super focused on $100 oil, 5% tenure, $40 billion of debt, a war. At the reality of getting deals done, credit is in really good shape. Spreads are tight. Equities are close to highs. We are way off that GDP curve. There is a little bit of call to action around the regulatory environment, which around M&A, that could change. We think we're early to mid-innings on M&A and IPOs, and I think what's hopefully really evident, but I hope it's even more evident by the time I'm done in 34 minutes and five seconds, is that that M&A and IPO cycle cascades down through all of Morgan Stanley.

And I think the third one that I think is big and topical is, and we'll talk, I think, more about it, is AI. We still think we're in relatively early to mid-innings around the AI financing element, which is really just a bridging of the timetable until, in essence, the build is build ahead of all of the revenue, but not the revenue path. And there is a lot of equity, and there's a lot of credit finance, and we're in the middle of that with really high share. But I think, again, that, and Ted answered it on the earnings call, we still think we're also early in middle innings. And you've seen just enormous announcements, NVIDIA, Broadcom, Google, and then the model players out there in that perspective. So I think in those three thematics that are pretty important, I would say, early to middle.

And none of them feel really late. And in that context, we don't think we're at peak.

Yeah. And I'm going to use some anecdotes to try to make it feel- Please a little alive here.

But at the macro sort of statistics level, very robust pipelines. They are very robust across product. They are driven by the dynamics I mentioned. Credit is in pretty good shape. GDP growth, 6.7% nominal GDP growth in the U.S. in the quarter. Real matters, but if you are a corporate, you have got to keep up with nominal. Equity near highs. All of those combine to make the product set at very strong investment banking. We were talking about this a few minutes ago. In that construct, we remain very constructive around the investment banking environment, and it cannot all get done this quarter. It cannot all get done in the fourth quarter. This is an 18- to 24-month cycle.

B is especially, well, A, you go public, and then most companies, if they are private equity owned or if they are venture owned, there is a cascade of secondaries or block trades or trading lock-up releases that continue. Those are all revenue events for us. But I would say most discreetly is M&A, which is if your competitor does an M&A deal, then you are going to react. We saw it at Morgan Stanley when we were doing M&A. Others would react to us, we would react to them, but extend that through the entirety of the economy. When someone does something strategic, it causes every boardroom in the ecosystem of that sector to think about strategic activity, and then it happens.