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Goldman vs. Morgan Stanley: Which Financial Giant Has More Upside?
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Key Takeaways
Goldman is refocusing on investment banking and trading while pulling back from consumer banking.
Morgan Stanley is diversifying via wealth and asset management, accounting for above 50% of its revenue base.
GS has higher EPS growth estimates and trades at a discount to both MS and the industry on a P/TBV basis.
When it comes to Wall Street's most prominent investment banks, Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) are consistently at the forefront. Both firms are well-positioned to capitalize on a rebound in mergers and acquisitions (M&A), and broader capital market activity, particularly as global dealmaking gains momentum following a period of uncertainty.
While market headwinds, such as relatively higher interest rates, geopolitical tensions and Trump’s trade policies, initially dampened sentiment, deal flow is showing signs of recovery. Against this backdrop, investors are revisiting the investment worthiness of GS and MS stock.
Let us break down which stock offers more upside potential, based on current fundamentals, growth trajectory and market positioning.
GS & MS’s Distinct Strategic Business Models
Goldman is sharpening its focus on its core strengths in investment banking (IB) and trading while scaling back its consumer banking footprint. The strategic shift aligns with the company’s efforts to concentrate on areas where it has consistently demonstrated strong performance. By leveraging its leadership position, extensive operational scale and exceptional talent, the company aims to strengthen its core businesses and drive growth in areas where it has a competitive edge.
In contrast, Morgan Stanley has lowered its reliance on capital markets for income generation. The company’s focus on expanding its wealth and asset management operations, and strategic acquisitions, such as Eaton Vance, E*Trade Financial and Shareworks, are steps in that direction. These moves have bolstered its diversification efforts, enhanced stability and created a more balanced revenue stream across market cycles. Both businesses’ aggregate contribution to net revenues soared to more than 55% in 2024 from 26% in 2010. For the first quarter of 2025, the aggregate contribution to net revenues was 50.3%.
Both firms faced headwinds in 2022 and 2023, as deal activities slowed dramatically, leading to declines in earnings due to weaker IB revenues. However, 2024 marked a turnaround, with a rebound in global M&A activity driving top and bottom-line growth.
Although 2025 began with cautious optimism, uncertainty stemming from Trump’s shifting tariff policies initially dampened dealmaking activity. Still, momentum has since recovered. The data available from Dealogic shows that despite an initial hiccup, the appetite for M&As remains resilient in the face of market volatility, geopolitical tension and Trump’s shifting tariff landscape. Many deals that were put on hold are likely to come back once there is more certainty about the direction of the economy, as capital remains available.
Given their prominent roles in M&A advisory and underwriting, both Goldman and Morgan Stanley are well-positioned to benefit from the anticipated continued rebound in investment banking revenues.
Goldman & Morgan Stanley’s Impressive Capital Distributions
Both GS and MS cleared the Federal Reserve’s 2025 stress test, indicating that the banks can withstand a severe recession with plenty of capital on hand to absorb hundreds of billions in losses.
After clearing the stress test, both companies announced their plans to return excess capital to shareholders via dividends and share repurchases.
Morgan Stanley announced plans to increase its quarterly dividend 8% to $1 per share. Also, the company has reauthorized its share repurchase program of up to $20 billion. MS raised dividends four times in the last five years, with a payout ratio of 43%. Similarly, Goldman plans to hike its dividend 33% to $4 per share. GS raised dividends four times in the last five years with a payout ratio of 28%. It also has a share repurchase plan in place. As of March 31, 2025, GS had $43.6 billion worth of shares available under authorization.
At present, MS has a dividend yield of 2.62%, which is higher than the industry average of 1.93% and Goldman’s yield of 1.72%.
Dividend Yield
Image Source: Zacks Investment Research
GS & MS Stock Performance & Valuation Analysis
In the past year, Goldman shares have gained 48.6%, outpacing Morgan Stanley’s 40.8% rise. In comparison, the Zacks Investment Bank industry has moved up 37.1%.
Price Performance
Image Source: Zacks Investment Research
In terms of valuation, GS holds a notable advantage over Morgan Stanley, with a significant gap between the two. Goldman’s trailing 12-month price-to-tangible book (P/TB) ratio is 2.07X, making its shares more attractive than Morgan Stanley’s 3.01X.
Price-to-Tangible Book TTM
Image Source: Zacks Investment Research
Further, the GS stock is trading at a discount compared with the industry’s trailing 12-month P/TB ratio of 2.83X. This makes the stock more promising for value investors.
Goldman & Morgan Stanley’s Earnings Estimates
The Zacks Consensus Estimate for Goldman’s 2025 and 2026 EPS implies year-over-year increases of 8.9% and 14.8%, respectively. The EPS estimates for 2025 and 2026 have moved upward over the past week.
Estimates Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Morgan Stanley’s 2025 and 2026 EPS implies year-over-year rallies of 7.4% and 8.4%, respectively. EPS estimates for 2025 have been unchanged, while the same has been revised upward for 2026 over the past week.
While both GS and MS are tough players with strong long-term prospects, Goldman has more upside potential. Its dominant position in investment banking, robust earnings growth trajectory, aggressive capital return strategy and attractive valuation create a compelling investment case.
As M&A activities rebound and capital markets regain momentum, Goldman’s strategic focus and leadership in dealmaking give it a clear edge. For investors seeking a combination of value, solid performance and market leadership, GS presents a better opportunity at this stage.
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Goldman vs. Morgan Stanley: Which Financial Giant Has More Upside?
Key Takeaways
When it comes to Wall Street's most prominent investment banks, Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) are consistently at the forefront. Both firms are well-positioned to capitalize on a rebound in mergers and acquisitions (M&A), and broader capital market activity, particularly as global dealmaking gains momentum following a period of uncertainty.
While market headwinds, such as relatively higher interest rates, geopolitical tensions and Trump’s trade policies, initially dampened sentiment, deal flow is showing signs of recovery. Against this backdrop, investors are revisiting the investment worthiness of GS and MS stock.
Let us break down which stock offers more upside potential, based on current fundamentals, growth trajectory and market positioning.
GS & MS’s Distinct Strategic Business Models
Goldman is sharpening its focus on its core strengths in investment banking (IB) and trading while scaling back its consumer banking footprint. The strategic shift aligns with the company’s efforts to concentrate on areas where it has consistently demonstrated strong performance. By leveraging its leadership position, extensive operational scale and exceptional talent, the company aims to strengthen its core businesses and drive growth in areas where it has a competitive edge.
In contrast, Morgan Stanley has lowered its reliance on capital markets for income generation. The company’s focus on expanding its wealth and asset management operations, and strategic acquisitions, such as Eaton Vance, E*Trade Financial and Shareworks, are steps in that direction. These moves have bolstered its diversification efforts, enhanced stability and created a more balanced revenue stream across market cycles. Both businesses’ aggregate contribution to net revenues soared to more than 55% in 2024 from 26% in 2010. For the first quarter of 2025, the aggregate contribution to net revenues was 50.3%.
Both firms faced headwinds in 2022 and 2023, as deal activities slowed dramatically, leading to declines in earnings due to weaker IB revenues. However, 2024 marked a turnaround, with a rebound in global M&A activity driving top and bottom-line growth.
Although 2025 began with cautious optimism, uncertainty stemming from Trump’s shifting tariff policies initially dampened dealmaking activity. Still, momentum has since recovered. The data available from Dealogic shows that despite an initial hiccup, the appetite for M&As remains resilient in the face of market volatility, geopolitical tension and Trump’s shifting tariff landscape. Many deals that were put on hold are likely to come back once there is more certainty about the direction of the economy, as capital remains available.
Given their prominent roles in M&A advisory and underwriting, both Goldman and Morgan Stanley are well-positioned to benefit from the anticipated continued rebound in investment banking revenues.
Goldman & Morgan Stanley’s Impressive Capital Distributions
Both GS and MS cleared the Federal Reserve’s 2025 stress test, indicating that the banks can withstand a severe recession with plenty of capital on hand to absorb hundreds of billions in losses.
After clearing the stress test, both companies announced their plans to return excess capital to shareholders via dividends and share repurchases.
Morgan Stanley announced plans to increase its quarterly dividend 8% to $1 per share. Also, the company has reauthorized its share repurchase program of up to $20 billion. MS raised dividends four times in the last five years, with a payout ratio of 43%. Similarly, Goldman plans to hike its dividend 33% to $4 per share. GS raised dividends four times in the last five years with a payout ratio of 28%. It also has a share repurchase plan in place. As of March 31, 2025, GS had $43.6 billion worth of shares available under authorization.
At present, MS has a dividend yield of 2.62%, which is higher than the industry average of 1.93% and Goldman’s yield of 1.72%.
Dividend Yield
Image Source: Zacks Investment Research
GS & MS Stock Performance & Valuation Analysis
In the past year, Goldman shares have gained 48.6%, outpacing Morgan Stanley’s 40.8% rise. In comparison, the Zacks Investment Bank industry has moved up 37.1%.
Price Performance
Image Source: Zacks Investment Research
In terms of valuation, GS holds a notable advantage over Morgan Stanley, with a significant gap between the two. Goldman’s trailing 12-month price-to-tangible book (P/TB) ratio is 2.07X, making its shares more attractive than Morgan Stanley’s 3.01X.
Price-to-Tangible Book TTM
Image Source: Zacks Investment Research
Further, the GS stock is trading at a discount compared with the industry’s trailing 12-month P/TB ratio of 2.83X. This makes the stock more promising for value investors.
Goldman & Morgan Stanley’s Earnings Estimates
The Zacks Consensus Estimate for Goldman’s 2025 and 2026 EPS implies year-over-year increases of 8.9% and 14.8%, respectively. The EPS estimates for 2025 and 2026 have moved upward over the past week.
Estimates Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Morgan Stanley’s 2025 and 2026 EPS implies year-over-year rallies of 7.4% and 8.4%, respectively. EPS estimates for 2025 have been unchanged, while the same has been revised upward for 2026 over the past week.
Estimates Revision Trend
Image Source: Zacks Investment Research
Final Thoughts on GS & MS’s Investable Analysis
Both Goldman and Morgan Stanley have a Zacks Rank #3 (Hold), which makes the task of choosing one stock difficult. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While both GS and MS are tough players with strong long-term prospects, Goldman has more upside potential. Its dominant position in investment banking, robust earnings growth trajectory, aggressive capital return strategy and attractive valuation create a compelling investment case.
As M&A activities rebound and capital markets regain momentum, Goldman’s strategic focus and leadership in dealmaking give it a clear edge. For investors seeking a combination of value, solid performance and market leadership, GS presents a better opportunity at this stage.