JPM Shares Q3 Capital Markets Outlook: A Catalyst for Revenue Growth?

JPMorgan JPM shared its outlook for third-quarter 2025 investment banking (IB) and markets revenues at the Barclays Annual Global Financial Services Conference. Douglas Petno, co-CEO of Commercial & Investment Banking (CIB), said IB revenues are expected to grow in low double digits year over year on the back of solid pipelines. Moreover, he signaled that clients, specifically larger ones, have been adapting to the rapidly evolving geopolitical scenarios as bigger mergers & acquisitions (M&A) and initial public offerings kick in and equity capital markets remain robust.

Petno further noted that the trading business is performing well. The momentum from the first half of the year is persisting in the third quarter, with market revenues projected to rise at a high-teens percentage rate. This can be attributed to “broad-based strength across FICC and equities.” Driven by the solid performance of the CIB segment, performance-related expenses are likely to increase, though Petno stopped short of providing any update on annual non-interest expense guidance.
 
Deal-making rose in early 2025, suggesting optimism in M&A. However, market sentiment cooled after Trump’s tariff policies launched on “Liberation Day.” Nonetheless, deal-making activities have since picked up as firms adapt to the dynamic environment. Further, uncertainty around tariff policies and heightened volatility aided trading revenues. Hence, JPM’s IB income increased 9.8% while equity and fixed income markets income rose 17.7% in the first half of 2025.

Further, between January and April, the bank strengthened its global banking unit by hiring over 300 bankers and adding several senior specialists in areas such as technology, energy and activism defense, according to Reuters.

JPMorgan’s healthy IB pipeline, an active M&A market, and higher volatility in the markets, given the uncertain economic environment, will likely aid its capital markets business, leading to higher fee income and revenues.

How are JPM’s Peers Reviving Capital Markets Revenues?

Alongside JPMorgan, other IB firms like Morgan Stanley MS and Goldman Sachs GS have been attempting to revive Capital Markets revenues in an evolving scenario.
 
While Morgan Stanley is diversifying beyond IB to build a more balanced revenue mix, IB and trading income remain key top-line drivers. Its IB revenues rose roughly 1% while trading income jumped 9.7% in the first six months of 2025 on a year-over-year basis. Given a stable and diversified M&A pipeline and higher client activity, Morgan Stanley remains cautiously optimistic, positioning itself to benefit as the macroeconomic situation evolves.

Goldman continues to dominate the IB business and maintains its long-standing top position in announced and completed M&As. Also, the firm has been benefiting from ongoing broader market trends.  Goldman’s Global Banking & Markets segment revenues rose 16.3% in the first half of 2025 on a year-over-year basis.

A strong deal pipeline and advisory backlog alongside rising client activity driven by market volatility position it well for growth in the Global Banking & Markets segment as market conditions improve.

JPM’s Price Performance, Valuation, and Estimates

JPMorgan shares have risen 24.3% this year. Morgan Stanley has gained 21.1% and Goldman jumped 33.4% in the same time frame.

YTD Price Performance

From a valuation standpoint, JPM trades at a 12-month trailing price-to-tangible book (P/TB) of 3.06X, above the industry average.

P/TB Ratio

The Zacks Consensus Estimate for JPMorgan’s 2025 earnings implies a decline of roughly 1% on a year-over-year basis, while the same for 2026 earnings suggests growth of 4.1%. In the past week, earnings estimates for 2025 and 2026 have remained unchanged.

Earnings Estimates Trend

JPM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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