GS Analysis: Goldman Sachs Earns $17 Billion in 2025 as Wall Street's Premier Investment Bank Trades at 18x Earnings — 6% Below Its All-Time High
Key Takeaways
- Goldman Sachs posted $17.2 billion in net income for 2025 on $125.1 billion in revenue, with diluted EPS of $51.32 — its best year in recent memory.
- The stock trades at 18x earnings and 2.2x book value ($399.74/share), a modest premium to JPMorgan but well below the S&P 500 multiple.
- Goldman has surged 110% from its 52-week low of $439.38 and now trades just 6% below its all-time high of $984.70.
- The Marcus consumer banking exit is complete, refocusing the firm on high-margin investment banking, trading, and asset management.
- Key risks include Goldman's inherent cyclicality, elevated leverage (5x debt/equity), regulatory uncertainty around Basel III capital requirements, and a pending fiduciary duty investigation.
Goldman Sachs (NYSE: GS) has completed a remarkable transformation. The firm that nearly defined the 2008 financial crisis has posted $17.2 billion in net income for fiscal 2025, its best year since the post-pandemic trading boom, while its stock has surged more than 110% off its 52-week low of $439.38 to trade at $922.24 — just 6% below its all-time high of $984.70.
The numbers tell a story of a company firing on all cylinders. Full-year revenue hit $125.1 billion, diluted EPS came in at $51.32, and the firm's return on equity has climbed back above 14% on an annualized basis. With a market capitalization of $279 billion and a price-to-earnings ratio of 18x, Goldman trades at a modest premium to peer JPMorgan Chase (15x) but well below the broader S&P 500 multiple — raising the question of whether Wall Street's most storied franchise still has room to run.
This analysis examines Goldman's valuation, earnings trajectory, balance sheet health, competitive positioning in investment banking and trading, and forward outlook to determine whether GS deserves a place in your portfolio at current levels.
Valuation: A Premium to Banks, a Discount to the Market
Goldman Sachs trades at 18.0x trailing earnings, 2.2x book value, and 9.1x revenue. For a diversified financial institution, these are not cheap multiples — JPMorgan trades at roughly 15x earnings and 2.1x book — but they reflect Goldman's higher-margin business mix skewed toward investment banking advisory, trading, and asset management rather than consumer lending.
Book value per share stands at $399.74, giving investors a tangible floor on the stock's value. Tangible book value per share is $313.40, meaning the market is paying $608.84 above tangible book — a significant premium that must be justified by Goldman's earning power. At its March 2025 low, GS traded at just 1.4x book value, which in retrospect was an extraordinary entry point.
The dividend yield of 0.46% is modest, but Goldman has historically returned capital through buybacks rather than dividends. The payout ratio of 27% leaves ample room for dividend growth, and the firm retired shares aggressively in 2025, bringing the diluted share count from 324.5 million in Q1 to 317.6 million by Q4.
GS Price-to-Book Ratio by Quarter (2025)
Earnings Performance: Four Strong Quarters Tell the Story
Goldman's 2025 was a tale of consistent execution. The firm delivered positive net income in every quarter, with full-year results showing $125.1 billion in revenue and $17.2 billion in net income — diluted EPS of $51.32.
Q1 2025 set the tone with $31.6 billion in revenue and $14.12 in diluted EPS, driven by strong trading results amid market volatility. Q2 saw a modest dip to $10.95 diluted EPS on $31.3 billion revenue as deal activity slowed seasonally. Q3 rebounded to $12.25 EPS on $32.2 billion revenue — the year's highest quarterly revenue. Q4 closed strong at $14.00 diluted EPS on $30.1 billion revenue, bringing the full-year total to an impressive $51.32.
Gross profit margins averaged 45.7% across the four quarters, while net margins ranged from 11.9% in Q2 to 15.3% in Q4. The effective tax rate varied significantly — from 16.1% in Q1 to 24.9% in Q2 — which partly explains the quarterly EPS volatility despite relatively stable revenue.
GS Quarterly Revenue and Net Income (2025, $B)
Financial Health: Leverage Is the Name of the Game
Understanding Goldman's balance sheet requires accepting that banks operate with leverage ratios that would terrify investors in any other sector. Goldman's debt-to-equity ratio stands at 5.0x, with total debt per share of $2,033. The company equity multiplier is 14.5x — meaning every dollar of equity supports $14.50 in assets.
This is normal for a global systemically important bank (G-SIB). What matters is whether the leverage is productive. Goldman's interest coverage ratio of 0.22x looks alarming at first glance, but this metric is misleading for banks where interest expense and interest income are both core business activities. The firm earned $20.4 billion in interest income against $16.7 billion in interest expense in Q4 alone, generating a healthy net interest margin.
Cash per share is $1,593, reflecting the massive liquidity buffers that regulators require of G-SIBs. The current ratio of 1.21 indicates adequate short-term liquidity, though this metric fluctuates quarter to quarter — it was 0.50 in Q3 and 0.90 in Q1 — as trading positions and client balances shift.
Goldman's return on equity tells the real health story. Annualized ROE came in between 12% and 15% across 2025 quarters, comfortably above the firm's cost of equity and representing a meaningful improvement from the sub-10% ROE years when the consumer banking experiment (Marcus) was dragging on results.
Growth and Competitive Position: The Investment Banking Franchise
Goldman Sachs occupies a unique position on Wall Street. While JPMorgan is the largest bank by assets and deposits, Goldman remains the premier pure-play investment bank and trading house. Its competitive advantages are deeply entrenched:
Advisory dominance: Goldman consistently ranks #1 or #2 globally in M&A advisory and equity underwriting. As IPO and M&A activity rebounds from the 2022-2023 drought, Goldman's advisory fees are poised to benefit disproportionately. The firm's brand and relationship network in boardrooms worldwide is arguably its most valuable — and least replicable — asset.
Trading prowess: The FICC (fixed income, currencies, commodities) and equities trading businesses generated the bulk of Goldman's revenue volatility but also its upside. In volatile markets like Q1 2025, trading desks can produce outsized returns. Goldman's technology investments in electronic trading and risk management give it an edge over smaller competitors.
Asset and wealth management: This is Goldman's growth story. The firm has been aggressively building its asset management platform, which now manages over $3 trillion in assets. This business provides recurring fee revenue that smooths out the cyclicality of investment banking and trading — exactly the kind of earnings stability the market rewards with higher multiples.
Marcus exit completed: Goldman's costly foray into consumer banking via Marcus has been wound down, eliminating a persistent drag on ROE. The firm is now focused on what it does best: serving institutional clients, ultra-high-net-worth individuals, and corporations.
Forward Outlook: Catalysts and Risks Ahead
Goldman's next earnings report is scheduled for April 13, 2026. Several catalysts and risks will shape the stock's trajectory:
Bull case: The M&A and IPO pipeline is rebuilding after two years of depressed activity. If deal volumes return to 2021 levels, Goldman's advisory fees could add several billion in annual revenue. Rate cuts by the Fed would boost fixed income trading and reduce Goldman's funding costs. The asset management business continues to compound, providing a growing base of recurring revenue. Share buybacks continue to shrink the float — the diluted share count dropped from 324.5 million to 317.6 million in 2025 alone.
Bear case: A recession would crush deal activity and trading volumes simultaneously. Goldman's leverage amplifies both gains and losses — in a severe downturn, writedowns on principal investments and trading losses could wipe out several quarters of profits. Regulatory risk remains ever-present for G-SIBs, with potential changes to capital requirements (Basel III endgame) forcing Goldman to hold more capital against its trading book. The Scott+Scott investor alert filed in February 2026 investigating potential fiduciary duty breaches adds a layer of legal uncertainty.
Tariff impact: The broader market context matters. With Trump's new 15% global tariff announcement and the Supreme Court striking down the previous tariff framework, macro uncertainty is elevated. Goldman's trading desks may benefit from volatility in the short term, but prolonged trade policy chaos could suppress the corporate confidence needed for M&A activity.
GS Diluted EPS by Quarter (2025)
Goldman vs. JPMorgan: How the Two Banking Giants Compare
With MacroSpire's recent analysis of JPMorgan Chase, it's worth comparing the two largest US-headquartered investment banks:
| Metric | Goldman Sachs | JPMorgan Chase |
|--------|:---:|:---:|
| Market Cap | $279B | ~$740B |
| Trailing P/E | 18.0x | ~15.0x |
| Price/Book | 2.2x | ~2.1x |
| 2025 Net Income | $17.2B | ~$57B |
| ROE (annualized) | ~14% | ~16% |
| Dividend Yield | 0.46% | ~2.0% |
JPMorgan is the larger, more diversified institution with a massive consumer banking franchise that provides deposit-funded lending and stable fee income. Goldman is the more concentrated bet on capital markets — when Wall Street is booming, Goldman outperforms; when markets seize up, Goldman suffers more.
For investors choosing between the two: JPMorgan offers more stability, a better dividend, and broader economic exposure. Goldman offers more upside to a capital markets recovery and is the purer play on investment banking activity. Both deserve consideration for a diversified financial sector allocation.
Conclusion
Goldman Sachs at $922 and 18x earnings is neither a screaming bargain nor dangerously overpriced. The stock has more than doubled from its 2025 lows, reflecting a genuine improvement in fundamentals — $17.2 billion in net income, a streamlined business mix after the Marcus exit, and a growing asset management platform that provides earnings stability.
The bull case rests on a normalization of M&A and IPO activity, continued share buybacks, and the compounding of the asset management franchise. The bear case centers on Goldman's inherent cyclicality, regulatory headwinds, and a stock that has already priced in much of the recovery. At 2.2x book value, the market is paying a meaningful premium for Goldman's franchise — a premium that is justified if the firm can sustain 14%+ ROE but vulnerable if capital markets turn south.
For individual investors, Goldman Sachs makes sense as a financial sector holding for those who want exposure to Wall Street's deal-making and trading engine. The stock is best accumulated on pullbacks toward $800-850 (roughly 1.8x book value) rather than chased at current levels near 52-week highs. Patient investors willing to ride the cyclicality may find that Goldman's best years under CEO David Solomon are still ahead.
Frequently Asked Questions
Sources & References
www.zacks.com
www.zacks.com
www.sec.gov
www.businesswire.com
Disclaimer: This content is AI-generated for informational purposes only and does not constitute financial advice. Consult qualified professionals before making investment decisions.