Can JPMorgan's IB Division Weather the Near-Term Macro Challenges?
JPMorgan JPM remains a top player in investment banking (IB), ranking #1 in global IB fees. In 2024, the company's total IB fees soared 37% to $8.91 billion after declining in 2023 and 2022.
Despite tariff-related ambiguity and extreme market volatility, momentum persisted in the first quarter of 2025. In the quarter, IB fees grew 12% year over year to $2.18 billion, fueled by strong advisory and debt underwriting activity.
The near-term IB prospects are cloudy due to market turmoil and ambiguity over monetary policy. Jeremy Barnum, JPM's chief financial officer, during the first-quarter earnings conference call, said, 'In light of market conditions, we are adopting a cautious stance on the investment banking outlook. While client engagement and dialogue is quite elevated, both the conversion of the existing pipeline and origination of new activity will require a reduction in the current levels of uncertainty.'
Additionally, during the Investor Day conference in May, Troy Rohrbaugh, co-CEO of the Commercial & Investment Bank (CIB) segment, noted that economic uncertainty is expected to hurt JPM's IB business in the second quarter, as deal-making activities have largely stalled. IB fees are expected to be down in the mid-teens range on a year-over-year basis. In the second quarter of 2024, IB fees in the CIB segment were $2.46 billion.
Despite these challenges, JPMorgan's long-term outlook for the IB business remains strong, driven by a healthy IB pipeline and an active mergers and acquisitions (M&As) market as well as its leadership position in the business. For IB fees, we estimate a CAGR of 2.2% by 2027.
How are JPM's Peers Coping With Near-Term IB Headwinds?
Not only JPMorgan, other IB firms like Morgan Stanle y MS and Goldman Sachs GS are facing similar challenges.
While Morgan Stanley is diversifying beyond IB to build a more balanced revenue mix, IB remains a key top-line driver. After a steep decline in 2022–2023, IB revenues rebounded 36% in 2024 to $6.71 billion and rose another 8% in the first quarter of 2025. With a stable and diversified M&A pipeline, Morgan Stanley remains cautiously optimistic, positioning itself to benefit once macroeconomic conditions improve.
Goldman continues to dominate the IB business and maintains its long-standing top position in announced and completed M&As. This underscores its enduring strength in the IB business despite broader headwinds in the sector. Like its competitors, JPM and Morgan Stanley, Goldman also witnessed a decline in the IB fees in 2022 and 2023, before it rebounded last year. Despite an 8% year-over-year fall in IB revenues in the first quarter of 2025, its strong deal pipeline and advisory backlog position it well for a rebound as market conditions improve.
JPM's Price Performance, Valuation and Estimates
JPMorgan shares have risen 10.8% this year. In contrast, Morgan Stanley has gained 4.8% and Goldman jumped 7.2% in the same time frame.
Image Source: Zacks Investment Research
From a valuation standpoint, JPM trades at a 12-month trailing price-to-tangible book (P/TB) of 2.81X, slightly below the industry average.
P/TB Ratio
Image Source: Zacks Investment Research
Moreover, the Zacks Consensus Estimate for JPMorgan's 2025 earnings implies a decline of 7% on a year-over-year basis, while 2026 earnings are expected to grow at a rate of 5.2%. In the past week, earnings estimates for 2025 and 2026 have moved marginally upward.
Earnings Estimates Trend
Image Source: Zacks Investment Research
JPM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
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