3 Must-Buy Investment Bank Behemoths After Solid Q4 Earnings

The investment bank industry flourished in 2025 driven by increased client activities, a rebound in underwriting and advisory businesses, a solid trading business and the massive application of artificial intelligence (AI) boosting long-term efficiency. This trend is likely to continue this year too.

The Zacks-defined Financial – Investment Bank industry is currently in the top 21% of the Zacks Industry Rank. In the past year, the industry has provided 22.9% returns, while its year-to-date return is 2.2%. Since it is ranked in the top half of the Zacks Ranked Industries, we expect the Investment Bank industry to outperform the market over the next three to six months.

At this stage, we recommend buying shares of three Investment Bank giants for stellar returns in 2026. These companies are: The Goldman Sachs Group Inc. GS, Citigroup Inc. C, and Morgan Stanley MS. Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.

The Goldman Sachs Group Inc.

Zacks Rank #2 The Goldman Sachs Group has benefited from solid revenue growth in the Global Banking & Markets and Asset & Wealth Management divisions. GS is refocusing on the core strengths of investment banking and trading businesses through restructuring and scaling back its consumer banking footprint.

GS’ expansion in the private equity credit market is expected to diversify its revenue base. Further, a solid liquidity profile will support its capital distribution activities. In November 2025, Goldman Sachs entered into an agreement with ING Bank Slaski to divest its Polish asset management firm, TFI. 

The deal is targeted for completion in the first half of 2026.  In 2024, GS completed the sale of GreenSky, its home improvement lending platform, to a consortium of investors. In the third quarter of 2025, GS transitioned the General Motors credit card program.

Goldman Sachs has an expected revenue and earnings growth rate of 8.6% and 10.3%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 2.3% over the last 30 days.

Citigroup Inc.

Zacks Rank #2 Citigroup has benefited from an increase in net interest income (“NII”) and lower provisions. C’s transformation initiatives, including consumer banking exits, cost cuts and operational streamlining, position revenues to grow in the upcoming period.

Citigroup’s expansion into private credit boosts diversification, with a strong capital base supporting shareholder returns. Driven by efficiency initiatives, management expects the return on tangible common equity to be 10-11% by 2026.

In June 2025, C announced a partnership with Carlyle Group to expand asset-based private credit opportunities in the fintech specialty lending space. The collaboration combines Carlyle’s structuring expertise with Citigroup’s SPRINT (Spread Products Investment in Technologies) team and market reach to co-invest in tailored financing solutions.

Citigroup has an expected revenue and earnings growth rate of 5.4% and 28%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 1% over the last 30 days.

Morgan Stanley

Zacks Rank #1 Morgan Stanley’s focus on wealth and asset management operations along with its strategic alliances and acquisitions will aid the top line. MS has benefited from investment banking (IB) business strength.

The deal to buy EquityZen will help MS tap the rapidly growing private markets landscape. The performance of the IB business will continue to be driven by a strong pipeline. MS’ efficient capital distribution activities reflect a solid balance sheet. 

MS’ partnership with Mitsubishi UFJ Financial Group, Inc. will keep supporting profitability. In 2023, the companies announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures. 

The new alliance saw combined Japanese equity research, sales and execution services for institutional clients at Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities.

Morgan Stanley has an expected revenue and earnings growth rate of 6% and 8.4%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 5.1% over the last 30 days.

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

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