Goldman Sachs (GS) Earnings Preview: Can M&A Dominance Justify the Valuation?

Goldman Sachs reports Q4 2025 results on Thursday, January 15, 2026, before market open. The quarter provides the first test of whether the firm’s M&A dominance in 2025 can sustain earnings momentum into a year where consensus expects EPS to decline 2.2% year-over-year to $11.37, despite revenue rising 4.7% to $14.53 billion.

The setup reflects a fundamental tension: Goldman finished 2025 as the #1 global investment bank in M&A fee revenue, advising on 38 of 68 mega-deals over $10 billion and collecting $4.6 billion in advisory fees, yet the stock trades 4.7% above consensus price targets after a 61% annual return.

Consensus sits at $11.37 EPS and $14.53 billion revenue, both below Q4 2024’s $11.95 and $13.87 billion, creating a rare setup where Goldman must beat estimates while managing expectations for 2026 deal flow sustainability. The Zacks Earnings ESP stands at negative 0.14%, indicating recent analyst revisions have turned slightly bearish despite four consecutive quarterly beats averaging 13.5% upside. The estimate behavior suggests the Street is marking-to-tape on trading conditions and expense discipline rather than extrapolating M&A momentum.

The quarter’s outcome will likely hinge on three variables: whether investment banking fees can offset tougher year-over-year comparisons in Asset & Wealth Management performance, whether trading revenues sustained Q1-Q2 2025 levels or reverted to Q3’s “calmer” tape, and whether compensation expense rose in a way that changes 2026 incremental margin assumptions. The stock’s reaction after Q3 2025, when Goldman beat EPS by 11.4% yet fell sharply on quality-of-results concerns, reinforces that forward commentary on pipeline and expenses will drive the post-earnings move more than the headline print.

Goldman Sachs enters Q4 2025 earnings after finishing the year as the #1 global investment bank in M&A fee revenue

Consensus Estimates

The consensus EPS estimate of $11.37 sits 4.9% below Q4 2024’s actual result of $11.95, creating an unusual setup where Goldman must navigate declining earnings expectations despite revenue growth projections. The estimate revision pattern shows modest upward drift over the past 30 days, rising 3.99%, but the Zacks Earnings ESP at negative 0.14% indicates the most recent analyst activity has turned cautious. This divergence reflects uncertainty about whether investment banking strength can offset headwinds in other segments, particularly Asset & Wealth Management where prior-year gains tied to equity investments may not repeat.

Revenue expectations of $14.53 billion represent 4.7% year-over-year growth, implying the Street models continued strength in fee-based businesses even as EPS contracts. The gap between revenue growth and earnings decline points to margin pressure assumptions, likely driven by compensation expense expectations after a strong M&A year. Goldman does not provide formal quarterly guidance ranges, leaving consensus to drift with near-term market conditions and peer results, a dynamic that historically produces estimate volatility into the print.

Management Guidance & Commentary

“It was an extraordinary M&A market,” driven by a “ubiquity of capital,” according to Goldman’s Global Co-Head of M&A Stephan Feldgoise, characterizing 2025 as an “exceptional M&A year.”

Management’s public commentary heading into Q4 2025 has emphasized the strength and sustainability of the M&A recovery, with executives highlighting both the volume of mega-deals and the breadth of capital availability supporting transaction activity. The firm’s 2026 M&A outlook, released in early January, reinforced confidence in continued dealmaking momentum, though it stopped short of providing specific quarterly revenue or fee guidance. This framing matters because it sets investor expectations for pipeline commentary on the earnings call, where the tone on backlog and CEO confidence will likely drive the stock’s reaction more than the reported numbers.

Goldman’s historical pattern is to avoid formal quarterly EPS or revenue guidance, instead providing qualitative commentary on market conditions, client activity levels, and cost discipline. After Q3 2025, management flagged internal productivity efforts tied to AI and associated staffing actions, signaling a focus on operating leverage even as revenues expanded. The absence of quantitative guidance leaves consensus to interpret management’s qualitative signals, creating estimate drift based on near-term trading conditions and peer results rather than company-issued ranges.

Analyst Price Targets & Ratings

Wall Street maintains a generally positive outlook on Goldman Sachs, with 78% of analysts rating shares a Buy or Strong Buy. However, the consensus target of $893.79 implies 4.7% downside from current levels, suggesting the stock has outpaced analyst expectations following its 61% annual return. This disconnect between positive ratings and below-market price targets reflects the challenge analysts face in justifying Goldman’s current valuation after its dramatic run-up.

Sector & Peer Comparison

Goldman trades at a 19.0x trailing P/E ratio, a 34% premium to JPMorgan’s 14.2x and 10% above Morgan Stanley’s 17.3x, reflecting the market’s willingness to pay for the firm’s investment banking franchise and Asset & Wealth Management transformation. The forward P/E of 16.9x sits at the high end of the peer group, exceeded only by Morgan Stanley’s wealth management-driven multiple, and implies the Street expects Goldman to sustain earnings growth despite near-term compression in Q4 2025 estimates.

Goldman’s valuation premium to peers reflects confidence in sustained M&A market share and wealth management transformation

Earnings Track Record

Goldman has beaten consensus EPS estimates in each of the last eight quarters, with an average surprise of 13.5% and a 77.8% beat rate over the past five years. The consistency of upside surprises reflects the Street’s tendency to under-model Goldman’s operating leverage when market conditions support both trading activity and deal flow, as seen in Q4 2024’s 32.3% beat and Q1 2024’s 35.3% upside.

Post-Earnings Price Movement History

Goldman’s post-earnings price reactions show minimal correlation between EPS beat magnitude and next-day stock performance, with an average move of just 0.5% and an average move on beats of negative 0.1%. The most striking example came in Q3 2025, when a 10.5% EPS beat triggered a 2.3% decline as investors focused on trading revenue quality and expense trends rather than the headline number.

Expected Move & Implied Volatility

The options market prices a 3.2% expected move for Goldman following Q4 2025 earnings, translating to a range of $908 to $968 based on the current $938 stock price. This implied move sits materially above the 0.5% average historical next-day reaction, suggesting options traders are positioning for either a larger-than-typical response or heightened uncertainty around the result’s implications for 2026 earnings power.

The options market prices a 3.2% expected move, well above Goldman’s historical 0.5% average post-earnings reaction

Expert Predictions & What to Watch

Key Outlook: Guidance Will Drive the Trade

The base case assumes Goldman reports EPS between $11.50 and $12.00, driven by investment banking fees that exceed Street assumptions on the strength of Q4 deal closings and continued M&A market share. However, the stock’s reaction will likely hinge on three factors beyond the reported number: whether Asset & Wealth Management can demonstrate continued net inflows and fee growth, whether trading revenues held up into year-end or reverted to Q3’s lower levels, and whether management’s 2026 commentary supports the current valuation premium.

Key Metrics to Watch

The setup heading into this print is straightforward: the market is paying today for the September narrative and wants proof the slope hasn’t flattened. A clean beat likely requires investment banking fees landing closer to $3.5 billion with trading revenues holding firm and compensation ratios below 32%—otherwise it risks reading as “fully priced.” The 77.8% beat rate provides some confidence, but Q3 2025’s post-beat selloff on quality-of-results concerns remains a fresh memory.

For investors looking to understand the broader context of financial markets and trading vs investing strategies, Goldman’s earnings provide a useful case study in how institutional performance can impact individual portfolio decisions.