Summary: Wall Street banks posted robust investment banking results in the first quarter and continue to expect elevated deal activity heading into 2026, driven by large M&A mandates and a crowded IPO pipeline. But executives warned that the U.S.-Israeli conflict with Iran and broader market uncertainty could disrupt deal execution and slow some transactions if the war persists.
Investment banking fees have been a major earnings driver at large U.S. banks this year. Across six prominent banks, fees from advising on mergers and acquisitions and underwriting transactions rose an average of 27% in the first quarter, according to executives. Industry data from Dealogic show that overall investment banking revenue climbed 14% to $28.2 billion in the quarter.
Banks remain upbeat about underlying client demand. Senior finance officers pointed to healthy pipelines and ongoing client engagement as reasons they expect dealmaking to continue gaining momentum through the remainder of the year and into 2026. But those same executives cautioned that the conflict in the Middle East - specifically the U.S.-Israeli military action involving Iran - and the market volatility it has caused present a clear risk to timing and execution.
"Looking ahead, planning, engagement and pipelines remain healthy, but of course, developments in the Middle East could have an impact on deal execution and timing," JPMorgan Chief Financial Officer Jeremy Barnum told analysts, underlining the tension between strong underlying demand and geopolitical risk.
Dealogic ranked JPMorgan at the top of industry investment banking revenue, followed closely by Goldman Sachs and Morgan Stanley. On the M&A front, Dealogic data show global M&A revenue increased 19% in the quarter to $11.3 billion, with Goldman Sachs leading that ranking, followed by JPMorgan and Morgan Stanley. The value of announced deals reached $1.38 trillion, marking the second-highest first-quarter total on record.
Executives pointed to a departure from the recent period of subdued dealmaking when tighter financial conditions had constrained activity. Citigroup Chief Financial Officer Gonzalo Luchetti said the bank has observed good levels of engagement in the pipeline in front of it, while cautioning that a protracted, deeper conflict could begin to produce deferrals into the second half of the year.
"We’ve seen good levels of engagement and good levels of activity in the pipeline that is in front of us," Luchetti said. "Of course, if the conflict were protracted and deeper for a longer period of time, that may start introducing some risk of deferrals and things like that, to the second half of the year."
Bank leaders emphasized that market volatility changes boardroom conversations but does not eliminate the strategic need for growth or capital. "Volatility, of course, can change and impact conversations within a boardroom, but it doesn’t mean that the need to strategically grow or get access to capital goes away," Morgan Stanley Chief Financial Officer Sharon Yeshaya said.
Much of the recent deal activity has been concentrated in technology - especially transactions tied to artificial intelligence - as well as in healthcare and financial services. Goldman Sachs Chief Executive David Solomon described the environment for investment banking activity as "incredibly robust, particularly M&A activity."
Several large transactions highlighted the quarter. In February, Devon Energy and Coterra agreed to an all-stock combination valued at $58 billion. In March, a consortium led by BlackRock’s Global Infrastructure Partners together with Swedish private equity firm EQT agreed to acquire U.S. power company AES in a $33.4 billion deal. That same month, SoftBank-backed fintech PayPay raised $880 million in a U.S. initial public offering, and Amazon was reported to be planning an approximately $37 billion, 11-part bond sale.
Wells Fargo Chief Financial Officer Mike Santomassimo said dialogue with clients remains active and strong, reflecting continued appetite for strategic transactions even as markets absorb geopolitical news. "Dialogue with clients still remains very active and very strong," he told reporters on a call.
IPO activity is another area where banks expect a pickup if market conditions stabilize. A roster of high-profile companies is expected to target public listings this year, led by SpaceX, OpenAI and Anthropic. PitchBook analyst Kyle Stanford estimated that combined, those three deals could roughly match the total raised in U.S. venture-capital-backed company IPOs over the past decade.
Goldman’s Solomon said the conflict in the Middle East caused a modest slowdown in IPO momentum, particularly in March, but that the equity issuance pipeline remains "very full." He noted equity markets have shown resilience, which could allow IPO activity to accelerate if that resilience continues.
The benchmark S&P 500 index has approached its first intraday record high since the conflict began, with stocks finding support on hopes that Washington and Tehran might return to negotiations to end hostilities. A revival in equity capital markets typically lifts related areas of banks' businesses - advisory for mergers and acquisitions, lending and trading - because stronger sentiment encourages companies to seek deals and investors to deploy capital.
"As long as you see some of the volatility come down, you’re likely to see some of those IPOs come to market at some point," Wells Fargo’s Santomassimo said, laying out the conditional path toward renewed equity issuance.
What this means for markets and sectors
- Investment banks: Strong fees and packed pipelines point to continued revenue opportunities from advisory and underwriting work.
- Technology, healthcare and financial services: These sectors have driven significant deal activity and are likely to remain central to M&A and financing markets.
- Equity markets and IPOs: A resilient stock market could re-open opportunities for high‑profile listings, lifting related banking businesses.