IPO & M&A Market Rebound: What it Means for Goldman's IB Business

The Goldman Sachs Group, Inc. GS is capitalizing on the ongoing rebound in global deal-making activities. The Global Banking & Markets division, which houses its investment banking (IB) business, remains the key growth engine. The division revenues accounted for 69.4% of the total net revenues as of June 30, 2025.

Although 2025 began with optimism, market sentiment briefly dipped following Trump’s tariff plans announced on 'Liberation Day' In April. Mergers and acquisitions (M&As) have since regained momentum, and Goldman’s IB fees rose 8% year over year in the first half of 2025. Specifically, advisory revenues rose 16% year over year, while debt underwriting revenues were up 2% and equity underwriting revenues grew nearly 1% in the first half of 2025.

Additionally, Goldman, one of the largest and well-known investment banks, maintained its leading position in announced and completed M&As, reinforcing its strength in Global Banking & Markets.

M&As are expected to remain robust in the second half of 2025, driven by stronger stock valuations, pent-up demand, and corporates’ pursuit of greater scale and competitiveness. This outlook is further supported by regulatory shifts under the Trump administration, with the Federal Reserve moving to loosen “well-managed” requirements and streamline approval processes, creating more conducive conditions for consolidation. These shifts should further bolster Goldman’s advisory revenues, wherein it already holds a commanding lead.

At the same time, the IPO market is showing renewed vitality. Investor demand for new issues is improving, particularly in technology and crypto-related offerings, aided by stronger equity markets, mainstream adoption of digital assets, favorable regulations, and a surge in Bitcoin prices. Importantly, the IPO pipeline is expected to remain solid through the end of 2025, signaling continued strength in equity underwriting.

With rising M&A deals and IPO pipelines, Goldman’s decent IB backlog and leadership position will continue to support its IB performance.

Here’s How GS Competes With MS & JPM in IB Business

Morgan Stanley's MS IB business has been subdued this year, with the metric inching up 1% from the prior-year quarter. Its fixed income underwriting fees decreased 2%, while equity underwriting income rose 5% year over year. Morgan Stanley’s advisory fees rose 2% year over year in the first half of 2025.

Morgan Stanley remains cautiously optimistic about the performance of the IB business, supported by a stable and diversified M&A pipeline.

JPMorgan’s JPM total IB fees (in the Commercial & Investment Bank segment) grew 9% year over year in the first half of 2025. Specifically, JPMorgan’s advisory and debt underwriting fees rose 11% and 14% year over year, respectively. On the contrary, equity underwriting fees fell 7%.

Given its leading market share, diversified capabilities, and global reach, JPMorgan is well-positioned to witness a solid performance in the upcoming period.

Goldman’s Price Performance, Valuation & Estimates

GS shares have gained 27.7% year to date compared with the industry’s growth of 23.2%.

Price Performance

From a valuation standpoint, Goldman trades at a forward price-to-earnings (P/E) ratio of 14.64X, above the industry’s average of 14.47X.

Price-to-Earnings F12M

The Zacks Consensus Estimate for GS’s 2025 and 2026 earnings implies year-over-year rallies of 12.6% and 14.9%, respectively. Likewise, the Zacks Consensus Estimate for GS’s 2025 and 2026 sales implies year-over-year increases of 6.3% and 6.5%, respectively. The estimates for both years have been revised upward over the past 30 days.

Estimates Revision Trend

Goldman currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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