Stocks endured a wild ride in the second quarter. It was great news for big banks.

Major investment banks' equities trading desks reported robust double-digit revenue growth in Q2 2025, primarily driven by heightened market volatility. Goldman Sachs led with a record $4.3 billion in equities revenue, marking a 36% increase, while Morgan Stanley saw a 23% rise and Bank of America 10%. This strong performance across the 'bulge bracket' banks was fueled by significant market swings, including those stemming from escalating trade tensions and geopolitical events, which pushed the CBOE Volatility Index (VIX) to levels not seen since the COVID-19 pandemic. The results underscore how market turbulence and increased client activity directly benefit trading operations, with retail platforms like Robinhood also capitalizing on these volatile conditions.

Analysis

Second-quarter 2025 results reveal exceptional performance across bulge bracket banks' equities trading desks, driven by a surge in market volatility. Goldman Sachs set a new Wall Street record with $4.3 billion in equities trading revenue, a 36% year-over-year increase, while Morgan Stanley and Bank of America reported significant gains of 23% and 10%, respectively. This revenue boom was directly fueled by whipsaw market conditions, including escalating trade tensions and geopolitical conflicts, which pushed the CBOE Volatility Index (^VIX) to its highest point since the COVID-19 pandemic. Bank executives, such as Citigroup's CEO Jane Fraser, noted that prior investments in trading platforms allowed them to capitalize on record client activity and volumes. The trend extends beyond institutional players, as evidenced by Robinhood's 160% stock surge in 2025, indicating that retail-focused platforms are also prime beneficiaries of the turbulent trading environment.

Key Decisions for Investors

• Given the direct link between volatility and trading revenues, investors should view banks with strong equities franchises, particularly standout performer Goldman Sachs, as direct beneficiaries of continued geopolitical or trade-related market turbulence.
• Monitor the CBOE Volatility Index and related news flow closely, as a sustained decrease from the quarter's peak levels presents a key risk to the continuation of this earnings outperformance in subsequent quarters.
• Pay close attention to Robinhood's upcoming earnings release on July 30 for insights into the health of the retail trader and as a barometer for the broader digital asset and high-beta trading environment.