J.P. Morgan & Co. surprised Wall Street Wednesday by reporting first-quarter profits that far exceeded expectations, fueled by unusually strong revenue gains from investment banking and asset management.

Profits at the nation's fourth-largest banking company rose 4.7%, to $628 million, or $3.37 a share. Analysts who track the company had prepared for strong results, but Morgan still managed to surpass First Call's consensus estimate, which had edged up in the past week, to $2.81 per share.

Douglas A. Warner 3d, chairman and chief executive officer, told shareholders at the New York company's annual meeting Wednesday that they had begun to "reap the rewards" of 10 years of spending by the company to build equity underwriting, advisory, and asset management businesses.

Revenues from equities businesses rose more than twofold, to $636 million, on strong gains in equity derivatives activities and underwriting. Revenues from investment banking rose 41%, to $364 million. Fees from advisory and underwriting rose 40%, to $543 million.

Revenues from asset management services increased 32%, to $407 million, reflecting gains from private banking and higher investment management fees, the company said. Assets under management increased 17% from the year-earlier period, to $370 billion.

Analysts said the results may foreshadow similar profits from other banking companies with extensive capital markets businesses, including Chase Manhattan Corp. and Citigroup Inc., which are due to report next week.

Extreme market volatility in late March had Wall Street worried that profits for Morgan and its peer group would be hurt. Morgan's profit surprise "may give people confidence that the companies that have yet to report could well have strong earnings," said Diane Glossman, an analyst at Lehman Brothers.

At the shareholder meeting, Mr. Warner emphasized the company's efforts to build electronic commerce capabilities either alone or in partnership with emerging companies. "E-business presents the most exciting growth opportunity we will see in our lifetime," Mr. Warner told shareholders. "There is a lot of hope in e-business and a lot of uncertainty. We are confident in our course," he said.

Total revenues rose 14%, to $2.8 billion, over the year-earlier period. Last year's first-quarter results included huge gains from hedges in Brazil.

Morgan hinted early last month that it was on track for a big gain in the quarter, and analysts had steadily raised their earnings estimates for the period. Even so, analysts said Wednesday that they had not expected such a strong showing, and some made substantial increases to estimates for the remainder of this year.

"Morgan in the last year has turned a corner toward significantly higher profitability," said David Berry, director of research at Keefe, Bruyette & Woods Inc.

Analysts said Morgan's investment banking business could benefit from expansion overseas. Ms. Glossman, who raised her estimate for yearend 2000 to $11.65 a share, from $10.80, said in a research note, "Morgan is particularly well positioned for the secular flood of European advisory activity."

Morgan also reported $153 million in first-quarter gains from private equity investments during the first quarter, compared with net losses of $14 million in the year-earlier period, when it wrote down Brazilian investments. Morgan said $68 million of the gain in the first quarter came from equity sales. It invested $120 million in private equity in the three months, about $80 million of it in fast-growing technology and e-commerce sectors.

Expenses rose 18%, to $1.85 billion, reflecting higher incentive compensation, investments to build investment banking, and investments in Web commerce projects such as LabMorgan and Morgan Online.

Mr. Warner, responding to a shareholder's question, acknowledged that Morgan's strong performance in recent quarters has not necessarily translated into higher value for investors. But he said efforts to streamline and focus on client businesses will eventually win over Wall Street.

"We have reconfigured and accelerated the mix of businesses with which we face off in the global marketplace," Mr. Warner said. A decades-old effort to build investment banking and asset management, for example, has lowered the company's level of pretax income from traditional credit activities - from 58% of the total in 1996 to 23% last year. Investment banking, equities, and asset management, meanwhile, made up none of the pretax income in 1996, but 25% of it last year.

"Operating leverage is beginning to work in our favor," Mr. Warner said, reassuring the shareholder that a solid track record would boost the shares.

Morgan shares closed Wednesday at $136.6875, up $1.9375.

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