Goldman Sachs doubles its earnings in Q4 as stock rises 6%

Key points

• Goldman Sachs reported blowout earnings for Q4, soundly beating estimates.

• The gains were fueled by an increase in investment banking fees.

• Goldman Sachs got a sizable price target upgrade from an analyst.

The gains were fueled by rising investment banking fees.

Goldman Sachs (NYSE: GS) reported strong fourth quarter earnings on Wednesday, fueled by a significant increase in investment banking revenue.

The leading investment bank and asset manager generated $13.9 billion in revenue in the fourth quarter, a 9% gain. The revenue total blew away estimates of $11.63 billion.

Net income more than doubled, rising to $4.1 billion in the quarter, up from $2.0 billion in the same quarter a year ago. Earnings per share also jumped more than double to $11.95 per share from $5.48 per share in Q4 2023. Goldman Sachs blew away EPS estimates of $7.99 per share.

For the full fiscal year, Goldman Sachs made $53.5 billion in revenue, up 16% year over year. Net income increased 68% for the year to $14.3 billion, or $40.54 per share.

Goldman Sachs stock was up roughly 6% on Wednesday to around $606 per share. It has surged 59% over the past 12 months.

On target

Goldman Sachs is one of the leading investment banks in the country by just about any measure. Investment banking also accounts for more of its total revenue than most of its major competitors. So, when the M&A market is hot, Goldman Sachs will flourish. When it is not, it will likely struggle relative to its peers.

In 2024, investment banking came back strong after two lackluster years and that should continue in 2025.

In the fourth quarter, Goldman Sachs generated 61% of its total revenue, or $8.5 billion, from its Global Banking and Markets business, which includes investment banking, underwriting, advisory, and institutional trading. About $2 billion of that came in the form of investment banking fees, which were 24% higher than they were in the same quarter a year ago.

Investment banking revenue was fueled by gains in equity underwriting, mainly driven by secondary and initial public offerings and private placements. Debt underwriting also saw solid gains, fueled by leveraged finance activity. Net revenues in advisory declined slightly.

Goldman Sach’s second largest business, Asset and Wealth Management, made $4.72 billion in revenue in the fourth quarter, up 8% from Q4 2023 and 24% from the previous quarter. The gains were spurred by higher management fees due to rising asset levels.

Finally, its Platform Solutions arm, which includes its consumer banking and credit cards, among others, rose 16% to $2.4 billion.

“I’m encouraged that we have met or exceeded almost all of the targets we set in our strategy to grow the firm five years ago, and as a result, have both grown our revenues by nearly 50% and enhanced the durability of our franchise,” Goldman Sachs CEO David Solomon said. “With an improving operating backdrop and growing CEO confidence, we are harnessing the power of One Goldman Sachs to continue to serve our clients with excellence and create further value for our shareholders.”

Full investment banking pipeline

Goldman Sachs did not provide an official outlook in its earnings presentation and materials. However, the firm indicated that its investment banking fees backlog has increased compared with the end of the third quarter.

Overall, it is expected to be a strong year for M&A, and that should certainly benefit Goldman Sachs. Back in December, Goldman Sachs CFO Denis Coleman acknowledged as much, saying he is optimistic about M&A activity in 2025. He reiterated those sentiments on the Q4 earnings call, according to The Fly.

Goldman Sachs stock also got a $100 price target increase from Argus to $620 per share. Overall, analysts have set a median price target of $600 per share, which is below where it is now. But don’t be surprised to se some upgrades in the coming weeks. The stock is still relatively cheap with a P/E of 16 and the M&A market looks robust.