Wall Street Earnings: 4 Key Themes for Q4

Major US banks begin reporting fourth-quarter earnings this week, starting with JPMorgan Chase on Tuesday, followed by Bank of America and Citi on Wednesday, and Goldman Sachs and Morgan Stanley on Thursday.

Competition is intensifying across the industry, with Wells Fargo analyst Mike Mayo noting it is at its most intense level since before the global financial crisis. Dealmaking rebounded significantly in 2025, with worldwide M&A value rising approximately 45% year-over-year, driving a surge in hiring competition and compensation.

Experts indicate that banking and trading bonuses are tracking higher, with investment banking advisory bonuses up as much as 20% from the prior year. Credit quality remains a focal point, though risks are currently viewed as contained, while AI strategy moves from experimental pilots to a core strategic priority for major firms.

The landscape on Wall Street is shifting as the biggest banks prepare to report fourth-quarter earnings. The competitive pressure is shaping how investors, analysts, and executives are thinking about the coming year. Mike Mayo, a longtime Wells Fargo analyst, stated that banks are waging the toughest fight they have faced against rivals in years to capture new business.

Mayo described the current environment as having "animal spirits unleashed," adding that competition is now "at its most intense level since before the global financial crisis." Banks across the industry are playing offense across sectors ranging from financial advisory to investment management to consumer banking.

This resurgence in activity is directly intensifying hiring competition. Denis Coleman, the chief financial officer at Goldman Sachs, acknowledged the firm is spending heavily to retain top performers. "We want to make sure that we're in a position to pay very competitively, particularly for our very best people," Coleman said.

Jeanne Branthover, vice chairman of DHR International, noted that deal momentum translates directly into hiring pressures. "What happens is the best talent is always going to be recruited," she said. "That is always the case when a market is good."

Even before earnings get underway, hopeful signals are emerging regarding pay. Alan Johnson, founder of compensation consultancy Johnson Associates, said initial readouts from industry insiders point to a strong year for bonuses.

"Banking and trading, the big winners for bonuses this year is sort of what I'm detecting," Johnson said. Investment banking advisory bonuses are tracking higher than predicted, rising as much as 20% from the year prior.

Dealmakers finished 2025 in the green after a rocky start marked by tariff worries and market volatility. Worldwide M&A value rose about 45% year-over-year, according to LSEG data, even as the total number of deals declined slightly.

Goldman Sachs analysts expect that momentum to carry forward into 2026, projecting growth in investment banking fees and a pickup in spending by financial sponsors. Matthew Toole, LSEG's director of deals intelligence, explained that some private equity firms are approaching a traditional exit window for companies they bought during the pandemic.

"Coming off of the year that we've had from an investment banking perspective — the second-largest year on record for announced M&A, the largest year on record for global debt, and also a record year for syndicated lending — I think you're going to see pretty significant growth in the investment banking fee pool," Toole said.

Credit quality is another closely watched theme as the earnings season begins. Mike Mayo noted that "credit is still fine," but added that the industry is on a "cockroach alert," referencing a comment made by JPMorgan CEO Jamie Dimon in October.

The collapse of subprime auto-lenders Tricolor Holdings and auto-parts company First Brands last fall raised questions about the health of the credit market. During his firm's third-quarter earnings call, Dimon said, "When you see one cockroach, there's probably more."

Mayo added that a major surprise at large banks would be unlikely, but cautioned that credit cycles often begin with isolated problems, particularly at midsize firms. Leaders in the private credit industry have pushed back on claims that private lending is behind rising credit stress.

They argue that some recent high-profile bankruptcies reflect risks tied to loans originated and syndicated by banks rather than held by private lenders. Despite the contained outlook, Mayo offered a note of caution: "When you're bullish, this is the time when bad loans are made."

Artificial Intelligence has moved from the experimental phase to a core priority for major banks. Sumeet Chabria, CEO of advisory firm ThoughtLinks, said AI has moved from isolated pilots to a core priority, anticipating more detail from banking chiefs on how their firms are deploying AI to enhance results.

"Every line of business' strategic plan will have clarity on how they're using AI and how they're going to drive value, for sure," Chabria said. "The focus has moved from projects and programs or pilots to enterprise — to AI being a strategic priority for all the top banks."

At Goldman Sachs, attention is trained on OneGS 3.0, the latest iteration of the company's cross-bank initiative to maximize returns across business lines. Mike Mayo pointed to Goldman Sachs 3.0 as one of the most interesting new data points this earnings season.

The program, announced last fall, is designed as a multi-year effort to boost profitability and productivity by leveraging AI. Goldman has said the initiative includes head count discipline and limited role reductions.