The Goldman Sachs Group, Inc. GS shares have tumbled 15% in the past three months compared with the industry’s decline of 10.3%. The stock has been rattled by escalating trade war concerns, with tariffs raising fears of high inflation and a possible global economic slowdown.
Following the broader market trend, GS’s peer JPMorgan JPM and Morgan Stanley’s MS shares fell 8% and 14.6%, respectively, over the same time frame.
Price Performance
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Given the recent pullback in the GS stock’s price, many investors must think whether the stock is worth holding on to for now. Let us delve deeper and analyze the factors.
Goldman & Prospects of 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.
Given market uncertainty and a slowdown of M&A activities, Goldman's IB revenues declined 8% year over year in the first quarter of 2025. On the contrary, its peers, JPMorgan and Morgan Stanley’s IB fees rose 12% and 7.7% in the first quarter.
However, Goldman’s leading position in deal-making activities indicates enduring client trust. This, along with an increased IB backlog, will likely convert into higher IB revenues once the operating backdrop improves, giving Goldman a strategic edge over peers.
Goldman’s Focus on Core Business
GS is making efforts to exit its 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 — Apple Card and 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 strong 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 (2.14%).
As of March 31, 2025, cash and cash equivalents were $167 billion, and near-term borrowings were $71 billion.
In July 2024, the company increased its common stock dividend 9.1% to $3 per share. In the past five years, it hiked dividends four times, with an annualized growth rate of 23.6%. Currently, its payout ratio sits at 28% of earnings.
Meanwhile, GS’s 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. 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.
How to Approach Goldman Stock Now?
Although GS’s IB business outlook appears uncertain in the near term, the company is well-positioned for long-term growth. Its leading position in IB and trading, combined with a diversified business model and global presence, provides a strong competitive edge. Its strong liquidity position aids capital distribution activities.
In terms of valuation, the GS stock also looks attractive. The stock is trading at a forward price/earnings (P/E) of 12.06X compared with the industry average of 12.88X. Goldman is also trading at a discount compared with its peers, JPMorgan and Morgan Stanley. Currently, JPM and MS have P/E multiples of 13.59X and 13.57X, respectively.
Price-to-Earnings F12M
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Despite weakness in the IB business, Goldman is expected to register year-over-year growth in 2025 and 2026. This reflects the company’s business diversification efforts.
Sales Estimates
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Earnings Estimates
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Hence, given its strong fundamentals, investors can consider holding on to Goldman’s stock to generate robust returns. The company carries a Zacks Rank #3 (Hold) now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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