Should You Invest in Goldman Stock Post Its Q3 Earnings Release?

The Goldman Sachs Group, Inc. GS announced third-quarter 2025 results on Oct. 14, before the opening bell. 

The company’s quarterly top and bottom-line numbers outpaced the Zacks Consensus Estimate. The solid improvement in trading revenues and investment banking (IB) business majorly supported Goldman’s performance.

Following solid quarterly results, should you buy Goldman’s stock? Before checking that out, let us discuss the company’s quarterly performance in brief.

Quick Glance at Goldman’s Q3 Performance

IB Revenues: Driven by higher advisory revenues, signifying a substantial rise in mergers and acquisitions (M&A) volumes, Goldman’s IB revenues jumped 42.5% year over year. Its peers, JPMorgan’s JPM IB fees rose to $2.6 billion, marking 17.1% year-over-year growth, whereas Morgan Stanley’s MS IB revenues were $2.1 billion, up 44.1%.

David Solomon, chairman and CEO of Goldman, highlighted improvements in M&A throughout the year and expects the constructive environment to persist through the end of 2025, with even stronger M&A activity anticipated in 2026 amid a favorable backdrop.

Trading Revenues: The volatile market drove Goldman’s trading volume in the quarter. The company’s equities trading revenues grew 7% year over year to $3.7 billion. Fixed income, currency and commodities trading revenues rose 17% to $3.5 billion.

Similarly, JPMorgan’s markets revenues jumped 25% year over year to $8.9 billion. Specifically, fixed-income markets’ revenues rose 21% to $5.6 billion, whereas equity markets’ numbers increased 33% to $3.3 billion. Morgan Stanley’s equity trading revenues climbed 35% year over year to $4.12 billion, and fixed-income trading income was up 8% to $2.17 billion. 

Asset & Wealth Management (AWM) Division: The AWM division generated revenues of $4.4 billion in the reported quarter, up 17% year over year. The increase reflects increased management and other fees, and significantly higher net revenues in private banking and lending.

Strong IB Business to Support Goldman

GS’s IB division continues to build on its momentum in 2025, buoyed by a resurgence in global dealmaking activity. The year began with optimism, though sentiment briefly cooled following Trump’s tariff announcement on “Liberation Day.” Since then, deal flow has accelerated, driving a steady uptrend in Goldman’s IB revenues.

Goldman ended the third quarter as the leader in both announced and completed M&A. The company advised on more than $1 trillion in announced M&A volumes year to date. Management indicated that 2026 is expected to be an even stronger year for M&A activity, barring any major macroeconomic shocks. The company’s backlog across IB is now at its highest level in the past three years.

Overall, the combination of favorable macro conditions, strong client pipelines and sustained leadership in M&A advisory positions Goldman well to extend its dealmaking dominance.

Goldman’s Strategic Streamlining Progresses Well

The company’s streamlining effort has been underway for some time as it retreats from the underperforming consumer banking ventures. GS is exiting its non-core consumer banking business and sharpening its focus on Global Banking and Markets, and 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 revenues recorded a compounded annual growth rate (CAGR) of 3.7% from 2022 to 2024, with the metric rising 17% year over year in the first nine months of 2025.

The AWM division’s net revenues witnessed a CAGR of 9.9% from 2022 to 2024. In the first nine months of 2025, the segment’s net revenues rose 4% year over year. The segment is expanding into fee-based revenue streams. Assets under supervision (AUS) rose to a record $3.5 trillion at the end of the third quarter, with impressive results in private banking and lending.

In alternatives, Goldman raised a record $33 billion in the quarter. As a result, the company expects to raise $100 billion in alternatives this year, substantially exceeding its prior full-year fundraising expectations. Goldman is also accelerating growth via innovative partnerships and acquisitions. This month, it agreed to acquire Industry Ventures to expand its exposure to the innovation economy and further solidify its position in the global alternatives market. Last month, Goldman expanded its alliance with T. Rowe Price to give individuals greater access to private markets, with new offerings set to launch in phases. Products for wealthy clients will debut by late 2025, followed by retirement solutions in 2026.

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 Sept. 30, 2025, cash and cash equivalents were $169 billion, and near-term borrowings were $73 billion. Given its strong liquidity, the company rewards its shareholders handsomely.

Post-clearing the 2025 Fed stress test, the company increased the quarterly dividend 33.3% to $4 per common share. 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 33% of earnings. 

JPMorgan raised its dividends six times over the past five years with a payout ratio of 28%. Morgan Stanley has raised its dividends five times over the past five years, with a payout ratio is 42%. 

Additionally, Goldman has a share repurchase plan in place. At the end of the third quarter of 2025, it had $38.6 billion worth of shares available under authorization.

Goldman’s Price Performance & Valuation Analysis

Year to date, shares of Goldman have appreciated 34.6% compared with the industry’s rally of 30.3%. Its peers JPMorgan and Morgan Stanley have gained 28.8% and 30.8%, respectively.

Price Performance

In terms of valuation, the GS stock looks inexpensive compared with the industry. The stock is trading at a forward price/earnings (P/E) of 14.42X below the industry average of 14.61X. The stock is also trading at a discount compared with its peers, JPMorgan and Morgan Stanley, which have forward P/E multiples of 14.64X and 16.88X, respectively.

Price-to-Earnings F12M

How to Approach Goldman’s Stock Now?

GS’s ongoing growth initiatives, consistent capital returns and a steadily improving AWM business provide a strong foundation for long-term financial performance. The rebound in M&A activity and a healthy deal pipeline continue to underpin the firm’s IB momentum, while its robust liquidity profile supports a sustainable and disciplined capital distribution strategy.

The Zacks Consensus Estimate for 2025 and 2026 earnings implies year-over-year growth of 18.6% and 12.6%, respectively. Over the past seven days, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised upward.

Estimate Revision Trend

In pursuing growth across business segments, operational efficiency remains central to Goldman’s strategy. During the third-quarter earnings call, management unveiled One Goldman Sachs 3.0 — an AI-driven, centralized operating model aimed at driving efficiency and creating capacity for future expansion. The initiative focuses on six key objectives: enhancing client experience, improving profitability, driving productivity, strengthening scalability and resilience, enriching the employee experience, and bolstering risk management.

The company’s recent performance and forward-looking initiatives reaffirm its progress toward achieving its mid-term goals of a 14-16% return on equity (ROE) and a 60% efficiency ratio. Supported by favorable market conditions, operational discipline and strategic execution, GS is well-positioned to sustain growth and deliver long-term value.

With its solid fundamentals and improving business mix, Goldman remains an appealing investment choice. The stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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