Goldman Stock Surges Over 57% in a Year: Is There Still Room to Run?

The Goldman Sachs Group, Inc. GS shares have surged 57.3% over the past year, outperforming the industry's 40.9% growth. Its peers, JPMorgan JPM and Morgan Stanley MS, shares rose 48.4% and 50.6%, respectively, over the same time frame.  

Price Performance

With such strong momentum, investors are now asking: Is there still room for Goldman to run, or has the stock peaked? Let us delve deeper and analyze what’s driving the growth and whether there is more scope to grow further.

Prospects of Goldman’s IB Business

A robust revival in merger and acquisition (M&A) activity was expected for 2025, bolstered by a potentially business-friendly Trump administration, expectations for regulatory rollbacks and pent-up demand. However, the reality so far has been more complicated.

Now, the timeline for a solid rebound in M&As has shifted to the second half of 2025 due to Trump’s tariff plans, which resulted in extreme market volatility. Given mounting inflationary pressure, a slowdown/recession in the U.S. economy is expected. Amid such a backdrop, companies are rethinking their M&A plans despite stabilizing rates and having significant investible capital.

In the first quarter of 2025, Goldman reported an 8% year-over-year decline in IB revenues, underwhelming against JPMorgan’s 12% growth and Morgan Stanley’s 7.7% increase in IB fees over the same period. On the surface, this may suggest Goldman is losing ground to its peers. However, the company continues to maintain a leading market share in global M&A advisory, underscoring deep institutional relationships and trusted deal execution capabilities. GS has reported an increased IB backlog, indicating a strong pipeline of potential deals that could convert into revenues as soon as macro conditions improve. This positions Goldman to capitalize well once M&A momentum improves, potentially giving it an edge over peers.

GS & Easing Capital Requirement Proposal

This week, the Federal Reserve proposed a 1.4% reduction in capital requirements for Global Systemically Important Banks (GSIBs), which could translate to approximately $13 billion in capital relief for major players like Goldman, JPMorgan, and Morgan Stanley.

This proposal, if finalized, would increase operational flexibility for GS. With lower capital buffers, Goldman would be able to reallocate resources more efficiently, potentially scaling operations in key areas such as lending, trading and treasury activities. Further, freeing up billions in capital could boost return on equity (ROE) and unlock new growth avenues. The company may opt to deploy excess capital into higher-yielding assets, invest in business expansion, or return it to shareholders via dividends and share buybacks.

Goldman’s Focus on Core Business

GS is making efforts to exit non-core consumer banking business and sharpen its focus on areas wherein it holds a competitive edge — IB, trading, and asset and wealth management (AWM).

Last November, per the Wall Street Journal report, Goldman received a proposal from Apple to end their consumer banking partnership. Per a January 2025 Reuters report, the collaboration may end before the contract runs out in 2030. The move is expected to affect two consumer banking products that Apple currently offers — the Apple Card and the Apple Savings account. 

In 2024, Goldman finalized a deal to transfer its GM credit card business to Barclays and completed the sale of GreenSky, its home-improvement lending platform. In 2023, the company divested its Personal Financial Management unit.

These moves demonstrate a well-thought-out exit from consumer finance, allowing Goldman to reallocate capital and attention toward higher-margin, more scalable businesses.

This strategic shift is benefiting the AWM division, which now plays a crucial role in the company’s long-term growth. AWM is expanding into fee-based revenue streams to help offset the volatility of the IB business. As of March 31, 2025, AWM managed more than $3.2 trillion in assets under supervision and is experiencing strong momentum in alternative investments and customized wealth solutions for ultra-high-net-worth individuals. In the first quarter of 2025, Goldman reported significant net inflows into its wealth management platform, providing solid evidence of the segment’s increasing market traction and client confidence.

Goldman’s Strong Liquidity Profile

GS maintains a fortress balance sheet, with 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 (1.79%).

As of March 31, 2025, cash and cash equivalents were $167 billion, and near-term borrowings were $71 billion. Given its strong liquidity, the company rewards its shareholders handsomely.

In July 2024, it increased its common stock dividend 9.1% to $3 per share. In the past five years, the company hiked dividends four times, with an annualized growth rate of 23.6%. Currently, its payout ratio sits at 28% of earnings.

Meanwhile, GS’ peer JPMorgan raised its dividend five times over the past five years, with a payout ratio of 27%. Morgan Stanley raised its dividend four times over the past five years and has a payout ratio of 43%. 

Additionally, Goldman has a share repurchase plan in place. In the first quarter of 2025, the board of directors approved a share repurchase program authorizing additional repurchases of up to $40 billion of common stock. Earlier, in February 2023, it announced a share repurchase program, authorizing repurchases of up to $30 billion of common stock with no expiration date. At the end of the first quarter, GS had $43.6 billion worth of shares available under authorization.

Goldman’s Estimates and Valuation Analysis

The Zacks Consensus Estimate for GS’ 2025 and 2026 revenues indicates a year-over-year rise of 3.5% and 5.9%, respectively. Likewise, the consensus estimate for 2025 and 2026 earnings indicates an 8.8% and 14.1% rise, respectively. 

Sales Estimates

Earnings Estimates

In terms of valuation, GS stock also looks expensive. The stock is trading at forward price/earnings (P/E) of 14.60X compared with the industry average of 14.55X. Goldman is also trading at a discount compared with its peers, JPMorgan and Morgan Stanley. Currently, JPM and MS have P/E multiples of 15.26X and 15.67X, respectively.

Price-to-Earnings F12M

GS Stock: A Solid Long-Term Play, Near-Term Caution Advised

Goldman has delivered outstanding returns over the past year, driven by strategic initiatives, strong capital returns and a growing wealth management business. Though its IB business performance lagged peers in the first quarter, its leadership in M&A advisory and robust deal pipeline signal potential upside once market conditions stabilize.

The Fed’s proposed capital requirement changes, combined with Goldman's exit from lower-margin consumer banking, provide additional flexibility to boost profitability and scale core operations.

However, with the stock trading at a premium compared with the industry and macro uncertainties persisting, the near-term risk/reward may be balanced. As such, Goldman stock warrants a cautious approach for now. However, it remains a strong long-term holding for investors looking for exposure to a diversified, well-capitalized financial giant poised to benefit from a recovery in deal-making and capital markets activity.

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.

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

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