GS

Goldman Sachs remains one of the best-positioned global investment banks, with durable franchises in trading, prime brokerage, underwriting/advisory, and a scaled Asset & Wealth Management platform that benefits from both market levels and client risk appetite. 1Q26 results reinforced this moat: the firm delivered its second-highest quarterly net revenues, aided by record Equities performance, underscoring strength in market-making, financing, and client distribution. The key industry swing factor is capital-markets activity and volatility: helpful for trading, but only supportive for investment banking if deal volumes reaccelerate.

Financially, profitability is strong: 1Q26 net revenues were $17.23B with net earnings of $5.63B, EPS of $17.55, and annualized ROE of 19.8% (ROTE 21.3%). Full-year 2025 net revenues were $58.28B and net earnings were $17.18B, suggesting earnings power has normalized higher versus the post-2021 trough. Valuation looks fair rather than cheap at roughly a mid-to-high teens TTM P/E (around 17–18x in mid-April 2026), while the forward dividend is $18.00 per share (about ~2% yield depending on price).

Over the next 12 months, the thesis hinges on (1) sustained equities/trading and financing strength if volatility persists, (2) a rebound in advisory and underwriting as CEO/CFO confidence improves, and (3) continued capital return capacity after strong profitability. Key risks are a sharp drop in market volatility (hurting trading), a stalled deal cycle, and tighter capital rules that could cap ROE and buybacks.

Recommendation: HOLD. The stock is backed by top-tier earnings power and capital returns, but the valuation already prices in a constructive cycle and leaves less margin of safety if capital-markets momentum fades.