Goldman Sachs Earnings: Strong Start to 2025 as Uncertainty Breeds Heightened Trading Activity

Morningstar’s Metrics for Goldman Sachs Group

• Fair Value Estimate: $490.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

What We Thought of Goldman Sachs Group’s Earnings

Goldman Sachs Group GS reported a strong start to the year, as near-constant shifts in market sentiment bred heightened volatility that produced exceptional trading revenue, effectively masking the tepid dealmaking environment posing headwinds for investment banking. Despite strong quarterly results and a recent selloff alongside broader equity markets, we continue to see shares being modestly overvalued, and we maintain our fair value estimate of $490 per share.

The company reported net income to common shareholders of $4.6 billion, or $14.12 per diluted share, on $15.1 billion of net revenue. Investment banking revenue declined 7% sequentially and 8% year over year as heightened macroeconomic uncertainty stalled the cyclical recovery in dealmaking activity that has been underway.

Despite these muted results, the global banking and markets segment holistically booked net revenue gains of 26% sequentially and 10% year over year, as continued developments in tariff policies spiked market volatility, enabling the FICC and equities businesses to generate historic revenues as clients repositioned their portfolios. While we forecast some normalization over the long run for both the trading business (which we believe is over-earning) and investment banking (which we see as under-earning), both trends may persist until markets attain more clarity surrounding shifts in global trade policy and their second-order geopolitical impacts.

The asset and wealth management segment has become increasingly material for the consolidated entity, which we view favorably, as management fees exhibit less cyclicality than investment banking fees. Segment results this quarter were mixed, as net revenue contraction of 22% sequentially and 3% year over year was worse than expected, considering assets are about 65% fixed income. However, continued net inflows brought assets under supervision up to $3.17 trillion, increasing its long-run earnings potential.