Baron Capital noted in its Q2 2026 investor letter that Morgan Stanley (MS) performed well due to strong execution in its franchise businesses, with Q1 results significantly exceeding expectations. Record fee income in wealth management and record revenue in institutional securities (including trading and investment banking) drove a return on tangible common equity of 27%. Management demonstrated confidence by increasing the dividend by 15% and authorizing a share repurchase program of up to $20 billion. The bank is also considered relatively immune to AI-related threats and is poised to benefit from capital raising needed to fund multi-year AI infrastructure development.