Goldman Sachs Earnings: Valuations remain stretched
We raise our fair value estimate for Goldman Sachs stock.
Mentioned: The Goldman Sachs Group Inc (GS)
Key Morningstar metrics for Goldman Sachs
- Fair Value Estimate: $700
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: High
What we thought of Goldman Sachs’ earnings
Goldman Sachs GS reported fourth-quarter 2025 earnings, generating outstanding 22% annual growth in its investment banking and markets business and raising its long-term targets for asset and wealth management fundraising, returns on equity, and reiterating targets for firmwide midteens ROEs.
Why it matters: We’re increasingly constructive regarding the near-term outlook for investment banking and trading, and Goldman’s results did little to undermine our thesis.
- Between high asset prices, falling interest rates, a solid economic backdrop, and pent-up demand from financial sponsors, markets look set up for another strong year in 2026. We now expect 11% growth in global investment banking revenue, to $115 billion, despite lapping strong 16%-17% growth in 2025.
- In an investment banking world where scale, distribution relationships, and willingness to extend financing have become increasingly important, we expect market share to continue to coalesce around the largest, bulge-bracket banks. This favors firms like Goldman, driving our forecast for 9.7% average market share over the decade to come, 30 basis points ahead of its 9.4% share between 2020-25.
The bottom line: After lifting our near-term forecasts for investment banking and trading revenue and giving the firm credit for improving returns in its asset and wealth management business, we’ve raised our fair value estimate for wide-moat Goldman Sachs to $700 from $630. Shares still trade at nearly a 40% premium to our revised valuation.
- As the dust settles from the firm’s recently announced sale of its Apple Card portfolio, we believe that the investment narrative regarding Goldman Sachs has tidied up considerably.
- The firm looks like it should be able to generate midteens through-the-cycle returns on tangible equity (we now forecast 15.7%, up from 14.7% previously) buoyed by a mix-shift toward capital-efficient lending, wealth, and asset management revenue streams, and the Apple Card divestiture.
