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Goldman Shares Gain 26.8% YTD: Should you Hold the Stock for Now?
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Key Takeaways
Goldman shares have risen 26.8% YTD, beating JPMorgan and Morgan Stanley's gains.
The bank is exiting consumer banking to focus on markets and wealth management.
IB revenues rose 8% in 1H25, with a strong deal pipeline ahead.
The Goldman Sachs Group, Inc. (GS - Free Report) shares have jumped 26.8% year to date, outperforming the industry's 22.2% rise. Shares of its peers, JPMorgan (JPM - Free Report) and Morgan Stanley (MS - Free Report) , have risen 22.8% and 16.9%, respectively, over the same time frame.
Price Performance
Image Source: Zacks Investment Research
With such strong momentum, investors are wondering whether to hold the stock for now or cash out the profit. Let us delve deeper and analyze what is driving the rally and whether there is more scope to grow.
Goldman’s Strategic Streamlining Paying Off
Goldman’s streamlining effort has been underway for some time as it retreats from the underperforming consumer banking ventures. The company is exiting its non-core consumer banking business and sharpening its focus on Global Banking and Markets and Asset and Wealth Management (AWM) divisions.
The Global Banking and Markets segment has been witnessing a rise in revenues over the past couple of years. The segment's net revenue recorded a compounded annual growth rate (CAGR) of 3.7% from 2022 to 2024, with the metric rising 16% year over year in the first half of 2025.
The AWM division’s net revenues witnessed a CAGR of 9.9% from 2022 to 2024. In the first half of 2025, the segment’s net revenues declined 3% year over year due to a decline in equity and debt investments, which were likely caused by market uncertainty.
Nonetheless, the segment is expanding into fee-based revenue streams. As of June 30, 2025, it managed $3.3 trillion in assets under supervision and is experiencing strong momentum in alternative investments and customized wealth solutions for ultra-high-net-worth individuals.
Moreover, GS is placing more emphasis on its AWM division, viewing it as a more stable revenue source. The company is reportedly exploring acquisitions to expand its AWM footprint.
During the second-quarter earnings call, management highlighted the critical role of scale in growing this business. CEO David Solomon noted, “There’s got to be a strategic fit in terms of things that we’re prioritizing in the growth of our asset and wealth management franchise.”
Revival of IB Business to Aid GS
Goldman’s investment banking (IB) revenues jumped 24% in 2024 to $7.73 billion from 2023, rebounding from a slump during the previous couple of years when global deal-making stalled amid the Russia-Ukraine conflict, recession fears, and high inflation. Despite subdued IB performance, the company maintained its #1 ranking in both announced and completed M&A.
This year has had its share of hiccups. It began on an optimistic note, although the market sentiment cooled after Trump’s tariff policies launched on 'Liberation Day'. Deal-making activities have picked up since then, with the uptrend in IB revenues continuing through the first six months of 2025. A strong deal pipeline and Goldman’s leadership position signal further upside as macro conditions improve.
Following the broader industry trend, JPMorgan’s IB fees rose 10% year over year, while Morgan Stanley’s IB fees increased 1% year over year in the first six months of 2025.
Goldman’s Strong Liquidity Profile Aids Capital Distribution
GS maintains a fortress balance sheet, with the Tier 1 capital ratios well above regulatory requirements. This financial strength allows it to return capital to shareholders aggressively through buybacks and a healthy dividend yield.
As of June 30, 2025, cash and cash equivalents were $153 billion, and near-term borrowings were $69 billion. Given its strong liquidity, the company rewards its shareholders handsomely.
Post-clearing the 2025 Fed stress test, the company increased the quarterly dividend to $4.00 per common share, marking an increase of 33.3% from the prior payout. In the past five years, the company has hiked dividends five times, with an annualized growth rate of 22%. Currently, its payout ratio sits at 26% of earnings.
Similarly, JPMorgan and Morgan Stanley raised their dividends five times over the past five years. At present, JPMorgan has a payout ratio of 29%, while Morgan Stanley’s payout ratio is 42%.
Additionally, Goldman has a share repurchase plan in place. At the end of the second quarter of 2025, GS had $40.6 billion worth of shares available under authorization.
GS’s Estimate & Valuation Analysis
The Zacks Consensus Estimate for Goldman’s 2025 and 2026 sales implies year-over-year growth of 6.2% and 6.5%, respectively. The Zacks Consensus Estimate for 2025 and 2026 earnings implies year-over-year growth of 12.4% and 14.9%, respectively.
Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised upward to $45.63 and $52.40, respectively.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, the GS stock looks expensive compared to the industry. The stock is trading at a forward price/earnings (P/E) of 14.45X compared with the industry average of 14.39X. Its peers, JPMorgan and Morgan Stanley, have forward P/E multiples of 14.48X and 15.56X, respectively.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
How to Approach Goldman’s Stock Now?
Goldman’s growth initiatives, strong capital returns, and an improving wealth management business will support its financials in the long term. The rebound in M&As and robust deal pipeline will continue to support the company’s IB business. Its strong liquidity profile will enable a sustainable capital distribution plan.
The company’s solid first-half 2025 performance is an indication of its trajectory relative to its mid-term goals of achieving 14-16% return on equity (ROE) and a 60% efficiency ratio.
However, the constantly evolving macroeconomic backdrop, given uncertainty related to tariff plans and their impacts on inflation, will likely affect the company’s performance. Also, IB business remains cyclical and highly dependent on broader market conditions and client engagement.
Hence, GS’s performance in the near term will be greatly influenced by its capacity to navigate these challenges to maximize financial performance. Investors should keep a close eye on these issues before taking a well-informed investment decision.
Image: Bigstock
Goldman Shares Gain 26.8% YTD: Should you Hold the Stock for Now?
Key Takeaways
The Goldman Sachs Group, Inc. (GS - Free Report) shares have jumped 26.8% year to date, outperforming the industry's 22.2% rise. Shares of its peers, JPMorgan (JPM - Free Report) and Morgan Stanley (MS - Free Report) , have risen 22.8% and 16.9%, respectively, over the same time frame.
Price Performance
Image Source: Zacks Investment Research
With such strong momentum, investors are wondering whether to hold the stock for now or cash out the profit. Let us delve deeper and analyze what is driving the rally and whether there is more scope to grow.
Goldman’s Strategic Streamlining Paying Off
Goldman’s streamlining effort has been underway for some time as it retreats from the underperforming consumer banking ventures. The company is exiting its non-core consumer banking business and sharpening its focus on Global Banking and Markets and Asset and Wealth Management (AWM) divisions.
The Global Banking and Markets segment has been witnessing a rise in revenues over the past couple of years. The segment's net revenue recorded a compounded annual growth rate (CAGR) of 3.7% from 2022 to 2024, with the metric rising 16% year over year in the first half of 2025.
The AWM division’s net revenues witnessed a CAGR of 9.9% from 2022 to 2024. In the first half of 2025, the segment’s net revenues declined 3% year over year due to a decline in equity and debt investments, which were likely caused by market uncertainty.
Nonetheless, the segment is expanding into fee-based revenue streams. As of June 30, 2025, it managed $3.3 trillion in assets under supervision and is experiencing strong momentum in alternative investments and customized wealth solutions for ultra-high-net-worth individuals.
Moreover, GS is placing more emphasis on its AWM division, viewing it as a more stable revenue source. The company is reportedly exploring acquisitions to expand its AWM footprint.
During the second-quarter earnings call, management highlighted the critical role of scale in growing this business. CEO David Solomon noted, “There’s got to be a strategic fit in terms of things that we’re prioritizing in the growth of our asset and wealth management franchise.”
Revival of IB Business to Aid GS
Goldman’s investment banking (IB) revenues jumped 24% in 2024 to $7.73 billion from 2023, rebounding from a slump during the previous couple of years when global deal-making stalled amid the Russia-Ukraine conflict, recession fears, and high inflation. Despite subdued IB performance, the company maintained its #1 ranking in both announced and completed M&A.
This year has had its share of hiccups. It began on an optimistic note, although the market sentiment cooled after Trump’s tariff policies launched on 'Liberation Day'. Deal-making activities have picked up since then, with the uptrend in IB revenues continuing through the first six months of 2025. A strong deal pipeline and Goldman’s leadership position signal further upside as macro conditions improve.
Following the broader industry trend, JPMorgan’s IB fees rose 10% year over year, while Morgan Stanley’s IB fees increased 1% year over year in the first six months of 2025.
Goldman’s Strong Liquidity Profile Aids Capital Distribution
GS maintains a fortress balance sheet, with the Tier 1 capital ratios well above regulatory requirements. This financial strength allows it to return capital to shareholders aggressively through buybacks and a healthy dividend yield.
As of June 30, 2025, cash and cash equivalents were $153 billion, and near-term borrowings were $69 billion. Given its strong liquidity, the company rewards its shareholders handsomely.
Post-clearing the 2025 Fed stress test, the company increased the quarterly dividend to $4.00 per common share, marking an increase of 33.3% from the prior payout. In the past five years, the company has hiked dividends five times, with an annualized growth rate of 22%. Currently, its payout ratio sits at 26% of earnings.
Similarly, JPMorgan and Morgan Stanley raised their dividends five times over the past five years. At present, JPMorgan has a payout ratio of 29%, while Morgan Stanley’s payout ratio is 42%.
Additionally, Goldman has a share repurchase plan in place. At the end of the second quarter of 2025, GS had $40.6 billion worth of shares available under authorization.
GS’s Estimate & Valuation Analysis
The Zacks Consensus Estimate for Goldman’s 2025 and 2026 sales implies year-over-year growth of 6.2% and 6.5%, respectively. The Zacks Consensus Estimate for 2025 and 2026 earnings implies year-over-year growth of 12.4% and 14.9%, respectively.
Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised upward to $45.63 and $52.40, respectively.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, the GS stock looks expensive compared to the industry. The stock is trading at a forward price/earnings (P/E) of 14.45X compared with the industry average of 14.39X. Its peers, JPMorgan and Morgan Stanley, have forward P/E multiples of 14.48X and 15.56X, respectively.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
How to Approach Goldman’s Stock Now?
Goldman’s growth initiatives, strong capital returns, and an improving wealth management business will support its financials in the long term. The rebound in M&As and robust deal pipeline will continue to support the company’s IB business. Its strong liquidity profile will enable a sustainable capital distribution plan.
The company’s solid first-half 2025 performance is an indication of its trajectory relative to its mid-term goals of achieving 14-16% return on equity (ROE) and a 60% efficiency ratio.
However, the constantly evolving macroeconomic backdrop, given uncertainty related to tariff plans and their impacts on inflation, will likely affect the company’s performance. Also, IB business remains cyclical and highly dependent on broader market conditions and client engagement.
Hence, GS’s performance in the near term will be greatly influenced by its capacity to navigate these challenges to maximize financial performance. Investors should keep a close eye on these issues before taking a well-informed investment decision.
At present, Goldman carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.