Goldman Sachs Soars on Q4 Post, Strong Investment Banking Outlook

When it comes to long-time behemoths in the financial sector, The Goldman Sachs Group (NYSE: GS) put up a standout performance in 2025. Overall, the stock’s total return was nearly 57%. Among more than 20 U.S. financial stocks with market capitalizations above $100 billion, Goldman provided a top-five return last year.

The stock’s rally isn’t letting up so far in 2026. As of the Jan. 15 close, Goldman shares have already risen 11% year-to-date (YTD). The company’s latest earnings report, released on Jan. 15, has a lot to do with the stock’s sustained success, shooting shares up 4.6%. A deep dive into Goldman’s financials and commentary provides optimism around the stock’s potential going forward. 

Goldman’s Q4: Revenue Falls, Profit Booms

During Q4 2025, Goldman Sachs posted revenue of $13.45 billion, equating to a drop of 3% from the prior year quarter. The figure significantly missed analyst projections of $14.3 billion.

But, counterintuitively, Goldman smashed expectations on earnings per share (EPS).

The figure came in at $14.01, increasing 17% from a year ago and beating expectations of $11.52 by a wide margin.

The divergence in Goldman Sachs' revenue and EPS was due to an important transition in its Apple (NASDAQ: AAPL) credit card business.

On Jan. 7, Goldman announced that it would sell the Apple Card business to JPMorgan Chase & Co. (NYSE: JPM) over the next 24 months.

Pursuant to accounting rules, this decision negatively impacted revenue by $2.26 billion, but positively impacted profit by $2.48 billion. The recent decision threw Wall Street forecasts out of whack, impacting the company’s results compared to expectations.

The decision is likely the right move for Goldman, as consumer lending is outside of its core competencies. In fact, RBC analyst Gerald Cassidy estimates that the firm has recorded about $7 billion in consumer lending losses since 2020.

Global Banking and Markets is by far Goldman’s most important segment, accounting for over 77% of total revenue last quarter. Here, Goldman shone. Revenue rose by 22%, with investment banking fees and net equity revenues both up 25%.

Price Targets Paint a Mixed Picture Around GS

The consensus price target on Goldman sits near $850. This figure does not look promising, implying around an 11% downside for the stock.

Some analysts updated their price targets following the release—Wells Fargo & Company raised its target from $970 to $1,050, while Autonomous Research lowered its target from $1,047 to $960. 

Generally, targets on Goldman Sachs range widely. HSBC released a $604 target on Jan. 7, while Jefferies Financial Group issued a $1,087 target on Jan. 6. These figures imply that shares could trade down 38%, or rise 11%. 

Given the market’s reaction to Goldman’s results, it's likely that other analysts will move their price targets in the coming days.

Investors will want to watch these price target updates to understand where the experts see GS stock going in 2026. 

Investment Banking Could Propel GS Further, But Valuation Risk Looms

Importantly, Goldman is bullish on its investment banking business in 2026. After seeing “high levels of client engagement” last year, the company expects activity to accelerate in 2026. Goldman says its investment banking backlog is its highest in four years, replenishing itself even after a very impressive Q4 and 2025. Goldman CEO David Solomon suggested that businesses are much more optimistic about potential mergers and acquisitions (M&A) under Trump than under Biden.

Large M&A deals typically require regulatory approval, and many view the Trump administration as more willing to grant it. This is an important tailwind for Goldman, as an easier regulatory backdrop in M&A is driving greater interest in its advisory services. Solomon implied that company CEOs see a window of opportunity to consider large deals under Trump. This comes as the next administration may scrutinize these deals more intensely.

Overall, the explosion in Goldman’s valuation during 2025 creates some trepidation going forward. However, the company is seeing considerable momentum in investment banking. Solomon’s comments suggest this can continue, especially given the urgency that the current regulatory environment could perpetuate. This creates a positive outlook for Goldman's shares going forward.

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The article "Goldman Sachs Soars on Q4 Post, Strong Investment Banking Outlook" first appeared on MarketBeat.