Super Earnings Week: US Big Banks Report Cards Highlight
During the January 2026 super earnings week, America’s major banks have all reported results. While each bank has a different business focus, one industry-wide consensus has clearly emerged: short-term expense increases in the name of future technology (AI).
The market’s response, however, has been brutally pragmatic. Tolerance for rising costs is fading, and the ROI (return on investment) stress test has officially begun.
AI transformation vs. operating expense growth has become the core “battleground” of this earnings season.
1. $JPMorgan Chase(JPM)$: The bold “long-term tech bet”
CEO Jamie Dimon has taken a firm stance on higher spending — essentially telling investors, “Trust me.” He argues that investing now in AI, data centers, and cybersecurity is the entry ticket to staying competitive over the next decade.
Investment banking fees came in weaker than expected, mainly due to softer debt underwriting, signaling some late-quarter fatigue in corporate financing activity.
Although EPS missed expectations, the market continues to assign a confidence premium to Dimon’s long-term vision.
2. $Wells Fargo(WFC)$: A full miss — layoffs plus AI spending
EPS, revenue, and NII all missed expectations, sending the stock down nearly 5% on the day.
The bank recorded $612 million in one-time severance costs, cutting traditional headcount to free up resources for AI modernization. The focus is on AI automation in credit card underwriting and approval processes, aimed at improving operating flexibility after asset cap removal.
The 2026 outlook was weak. Wells Fargo guided 2026 NII to around $50 billion, below the Street’s average expectation of $50.33 billion, underscoring persistent margin pressure in a backdrop where the Fed is expected to cut rates 2–3 times.
3. $Bank of America(BAC)$: The beat yet still sold off
Best-in-class Q4 equity trading performance: Equities trading revenue surged 23% to $2.02 billion, well above the $1.9 billion consensus.
Net interest income rose 10% YoY, driven by global market activity, asset repricing, and growth in loan and deposit balances.
Wealth management revenue also posted strong growth, supported by higher market valuations and fee income.
Despite beating on both EPS and revenue, the stock suffered its largest earnings-day drop since 2020, driven by concerns over expense growth.
The message was clear: even strong numbers are not enough when investors are highly sensitive to cost acceleration, reflecting a harsh ROI test for the banking sector.
4. $Citigroup(C)$: Pragmatic “structural restructuring” & layoffs
Similar to Wells Fargo, Citi is also cutting headcount — around 1,000 layoffs this week — as part of CEO Jane Fraser’s cost-control initiatives.
Although the quarter included a $1.2 billion loss from Russia exit, investment banking fees jumped 35% YoY to $1.3 billion, setting a new M&A revenue record. Still, this was not enough to fully offset the Russia-related losses.
Citi is using AI to optimize risk management and compliance workflows, a key pillar of Jane Fraser’s broader simplification strategy.
In 2025, Citi repurchased $13.3 billion of shares, signaling continued commitment to shareholder returns even amid transformation.
5. $Morgan Stanley(MS)$: A wealth-management-driven “steady-state machine”
Under CEO Ted Pick, Morgan Stanley delivered a double beat on revenue and profit, with Q4 ROTCE reaching 21.8%, a highly compelling figure for a capital-intensive investment bank.
Wealth management as the core engine:
Q4 revenue of $8.43 billion (+13% YoY); Net inflows of $122.3 billion in Q4; Full-year net inflows of $356 billion, lifting total client assets to $9.3 trillion
This fee-based, recurring revenue stream is the cornerstone of Morgan Stanley’s valuation premium.
Investment banking rebounded strongly; FICC lagged: Investment banking revenue surged 47% YoY as M&A and IPO activity thawed, while equities trading remained resilient. The only weak spot was fixed income (FICC), where low volatility in commodities and FX weighed on results.
Costs and capital discipline intact: Despite higher tech investment and execution costs, the efficiency ratio improved to 68%. The firm repurchased $1.5 billion of shares in Q4 and $4.6 billion for the full year.
6. $Goldman Sachs(GS)$: The trading king returns but transformation pain remains
The transfer of the Apple Card business to JPMorgan Chase resulted in a $1.68 billion net revenue loss in the Platform Solutions segment in Q4, dragging overall revenue. Excluding this accounting impact, Goldman’s core businesses were exceptionally strong.
Equities trading hit an all-time Wall Street record:
Q4 equities trading revenue reached $4.31 billion, the highest in industry history, driven by strong prime brokerage and derivatives demand — reinforcing Goldman’s “king of trading” status.
Investment banking also recovered: Q4 investment banking fees rose 25% YoY to $2.58 billion, with a clear rebound in M&A advisory and a growing backlog pointing to further momentum.
While the Apple Card exit created short-term noise, it also marks Goldman’s renewed focus on institutional businesses and high-end asset management.
For the full year, Goldman returned $16.78 billion to shareholders and raised its quarterly dividend by 12.5% to $4.50, signaling strong confidence in cash flow.
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