The Goldman Sachs Group, Inc. (GS Quick QuoteGS - Free Report) shares have jumped 53.5% in 2025, outperforming the industry’s growth of 37.1%, and its peers JPMorgan (JPM Quick QuoteJPM - Free Report) and Morgan Stanley’s (MS Quick QuoteMS - Free Report) rallies of 34.4% and 41.2%, respectively.

Price Performance

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After such a strong rally, investors are now asking an important question: Should they hold the stock for further upside or lock in profits?

To answer that, let us examine the key growth drivers and risks shaping Goldman’s 2026 outlook.

Factors Impacting Goldman’s Performance

Investment Banking Rebound Driving Momentum: Given the industry-wide turnaround in the investment banking (IB) business, Goldman’s performance has been impressive. The company’s IB revenues rose 21% year over year in 2025, riding a wave of deal-making and initial public offering (IPO) activity. 

Going ahead, a healthy global IB pipeline, an active merger and acquisition (M&A) market, “reopening of the IPO market,” and the company’s leadership position will aid it amid the changing macro situation.

Against this backdrop, GS stands out as a key beneficiary. Management projects an even stronger M&A environment in 2026, provided macroeconomic conditions remain stable. The company has seen high levels of client engagement across its IB business, and expects the activity to accelerate in 2026. With the IB backlog at a four-year high and the company’s leadership position in IB, Goldman is well-positioned to benefit in the upcoming period.  Similarly, JPMorgan and Morgan Stanley are expected to record solid IB income growth this year as the industry-wide backdrop turns favorable.  

Strategic Streamlining Is Paying Off: The company’s streamlining efforts have been underway for some time as it retreats from the underperforming consumer banking ventures. Under CEO David Solomon, the company has embarked on a deliberate transformation to exit non-core consumer banking and double down on the divisions where Goldman maintains a clear competitive advantage.

In sync with its restructuring efforts, in January 2026, Goldman signed an agreement to transition the Apple Card program and associated accounts to JPMorgan. In December 2025, Goldman entered an agreement to acquire Innovator Capital Management. The deal significantly expands Goldman’s active ETF capabilities and is part of a broader pivot toward building “durable revenue streams” through diversified asset management and wealth-management offerings. In November 2025, Goldman reached an agreement with ING Bank Slaski to divest its Polish asset management firm, TFI. The deal is targeted for completion in the first half of 2026. In the third quarter of 2025, Goldman completed the sale of its GM credit card business to Barclays.

In 2024, Goldman completed the sale of GreenSky. In 2023, it sold its Personal Financial Management unit to Creative Planning and also sold all of Marcus’s loan portfolio, part of its broader retreat from consumer banking. 

These moves demonstrate a well-thought-out exit, allowing the company to reallocate capital and attention toward higher-margin, more scalable businesses like Global Banking and Markets and the asset and wealth management (AWM) divisions. The benefits of business restructuring began to show in the numbers. The Global Banking and Markets segment’s net revenues rose 18% year over year in 2025, whereas the AWM division’s net revenues rose 2%, reflecting growing fee income and strength in private credit. AWM division’s scale continues to expand. Total assets under supervision rose to a record $3.61 trillion in 2025.

Scaling AI to Transform Business: GS is executing a firmwide artificial intelligence (AI) transformation that spans trading, investment banking, asset management and internal productivity, with a clear objective to lift fee income and expand operating leverage over the coming years. At the center of this effort are the “One Goldman Sachs 3.0 (OneGS 3.0)” transformation and the “GS AI Assistant” program, both designed to embed generative and predictive AI into nearly every major workflow across the firm.

Management described OneGS 3.0 as a multi-year overhaul that embeds AI as a core operating capability rather than a standalone tool. The initiative focuses on simplifying processes, boosting productivity and enabling scalable growth, supported by high-quality data, shared platforms and modern infrastructure. 

In parallel, the firm is reshaping its front-office strategy, recently reorganizing its TMT investment banking division to sharpen its focus on AI-related deal-making, including digital infrastructure, semiconductors, connectivity and core software, in response to evolving client demand.
Beyond operations and advisory, Goldman’s AI push is reshaping its revenue mix toward higher-fee, data-driven businesses and away from more balance-sheet-intensive activities. The planned acquisition of Industry Ventures reflects this shift, as Goldman looks to apply advanced analytics and AI to improve valuation, risk assessment and portfolio construction in private markets.

Overall, AI is emerging as a long-term growth engine for the firm, strengthening operating leverage, deepening client relevance and reinforcing Goldman’s competitive positioning.

Betting Big on Private Equity to Aid Growth: The company is aggressively expanding its private equity and alternatives business throug acquisitions, platform enhancements and the integration of new investment capabilities, which will likely support its growth over the long run.

In sync with this, in January 2026, Goldman acquired Industry Ventures, a leading venture capital platform that invests across all stages of the venture capital lifecycle. The acquisition underscores Goldman’s intent to strengthen its position in private markets and expand access to high-growth technology companies for clients globally.

In September 2025, GS partnered with T. Rowe Price in a $1-billion deal to co-develop retirement and wealth products. Later, the firms expanded the partnership to roll out alternative investment offerings for wealthy clients in 2025 and retirement savers in 2026. In January 2025, the company launched initiatives to grow private credit and other asset classes, including forming the Capital Solutions Group and expanding its alternatives team.

Goldman is expanding its private equity credit services internationally, focusing on Europe, the U.K. and Asia. Private banking and lending revenues reached record levels in 2025. Management expects high-single-digit annual growth in private banking and lending revenues over time, supported by international expansion, deeper integration with alternatives and continued focus on capital-light, client-driven lending solutions.

Private lending remains a key contributor to the firm’s target of improving AWM margins and returns over the medium term. The company's AWM unit intends to expand its private credit portfolio to $300 billion by 2029.

However, concerns in the private credit market could create risks for Goldman, especially if economic conditions weaken and borrowing costs stay high. Because private credit often funds middle-market companies, rising defaults or refinancing difficulties could lead to write-downs and lower returns on Goldman’s lending investments. In addition, investor caution toward the sector could slow fundraising and deal activity, potentially pressuring the firm’s asset management business growth in the near term.

Robust Liquidity 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 Dec. 31, 2025, Wells Fargo’s long-term debt was $174.7 billion. However, short-term borrowings were $251 billion. The company has a strong liquidity position, with a liquidity coverage ratio of 119% as of Dec. 31, 2025, which has exceeded its regulatory minimum of 100%. Its liquid assets (including cash and due from banks, as well as interest-earning deposits with banks) totaled $174.2 billion as of the same date.

Given its strong liquidity, the company rewards its shareholders handsomely. In January 2026, the company increased the quarterly dividend 12.5% to $4.50 per common share. In the past five years, the company has hiked dividends six times, with an annualized growth rate of 20.8%. Currently, it has a dividend yield of 2.2%.

JPMorgan raised its dividends six times over the past five years and offers a dividend yield of 2.1%. Morgan Stanley has raised its dividends five times over the past five years and has a dividend yield of 2.5%.

Additionally, Goldman has a share repurchase plan in place. In April 2025, its board of directors authorized an additional $40-billion share repurchase program, following the $30-billion authorization announced in July 2023. As of Dec. 31, 2025, the company had remaining authority to repurchase up to $29.7 billion of common stock.

Goldman’s Earnings Prospects & Valuation Analysis

Analysts are bullish on GS. Over the past 60 days, the Zacks Consensus Estimate for 2026 and 2027 earnings has been revised upward. The Zacks Consensus Estimate for Goldman’s 2026 and 2027 earnings implies year-over-year growth of 10.3% and 10.7%, respectively.

Estimate Revision Trend

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In terms of valuation, the GS stock looks expensive compared with the industry. The stock is trading at a forward price/earnings (P/E) of 14.26X above the industry average of 12.94X. Its peers, JPMorgan and Morgan Stanley, have forward P/E multiples of 13.04X and 14.31X, respectively.

P/E F12M

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Final Thoughts on GS Stock

Despite its strong rally in 2025, the long-term investment case for Goldman remains compelling. The company is benefiting from a rebound in IB activity, strong momentum in M&A and IPO markets, and a strategic shift toward higher-margin businesses, such as asset and wealth management. 

Several structural drivers could support continued growth. Goldman’s expanding private credit and alternatives platform, growing assets under supervision, and firmwide AI transformation through initiatives like OneGS 3.0 position the bank to improve efficiency, enhance client offerings and generate higher fee-based revenues. At the same time, a strong capital base, impressive dividend yield and an active share-repurchase program provide additional support for shareholder returns.

While the stock now trades slightly above the industry average valuation and risks remain tied to macroeconomic uncertainty or private-credit market stress, Goldman’s leadership in global investment banking and strengthening diversified revenue streams suggest it is well-equipped to sustain earnings growth.

Hence, the GS stock still appears to be a solid buy for investors seeking healthy long-term returns.

At present, GS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.