The Goldman Sachs Group, Inc. (GS): A Bull Case Theory

Ricardo Pillai

Thu, Apr 17, 2025, 8:21 AM 3 min read

We came across a bullish thesis on The Goldman Sachs Group, Inc. (GS) on Substack by LongYield. In this article, we will summarize the bulls’ thesis on GS. The Goldman Sachs Group, Inc. (GS)'s share was trading at $499.05 as of April 16^th. GS’s trailing and forward P/E were 11.58 and 11.39 respectively according to Yahoo Finance.

A businessman making a powerful speech in a boardroom, symbolizing the company's successful asset management.

Goldman Sachs Group, Inc. delivered a strong financial performance in Q1 2025, marked by resilient operations across its core segments despite macroeconomic headwinds. The firm reported net revenues of $15.06 billion, up 6% year-over-year, with net earnings of $4.74 billion and EPS of $14.12, significantly outperforming both Q1 and Q4 2024. This translated to an impressive ROE of 16.9% and ROTE of 18.0%. Operational discipline was evident in the efficiency ratio of 60.6%, a slight improvement from the prior year, as operating expenses rose 5% mainly due to increased compensation tied to stronger business performance. The firm returned a record $5.3 billion to shareholders, including $4.4 billion in stock repurchases, and authorized a new $40 billion multiyear buyback program—demonstrating high confidence in its capital generation and long-term outlook.

The standout segment was Global Banking & Markets (GBM), which posted $10.71 billion in net revenues, a 10% increase year-over-year and 26% quarter-over-quarter, with ROE exceeding 20%. While investment banking revenues fell 8% YoY due to lower advisory fees, strength in debt underwriting and a growing deal backlog signal optimism for future quarters. FICC revenues rose modestly to $4.4 billion, led by record financing activity, though intermediation showed mixed results. Equities was a high point, with record revenues of $4.19 billion, fueled by strong derivatives trading and record prime balances. This reflects Goldman’s ability to capitalize on client activity and volatility while managing risk effectively.

Asset & Wealth Management (AWM) generated $3.68 billion in revenue, down 3% YoY due to weaker equity and debt investments, but underpinned by consistent management fee growth and record assets under supervision of $3.17 trillion. Notably, this marked the 29th straight quarter of fee-based net inflows. Platform Solutions, while smaller, saw revenues dip 3% amid lower transaction banking activity, though reduced credit losses highlighted sound risk controls.

Strategically, Goldman is executing on a multi-year efficiency plan, reallocating resources from historical principal investments and doubling down on AI-driven productivity tools. CEO David Solomon pointed to marquee M&A mandates and tech investments as evidence of Goldman’s competitive edge. The firm remains cautious on macro conditions, citing recession risk, trade tensions, and regulatory shifts, but sees opportunity in potential SLR and Basel III reforms that could release industry capital. Overall, Goldman’s Q1 results showcase strong fundamentals, prudent capital management, and a clear strategic direction, positioning it to outperform if market conditions stabilize.