Goldman Sachs reported robust Q2 2025 earnings with net revenues of $14.58 billion and EPS of $10.91, positioning the stock as a buy based on updated valuations.
In a financial landscape marked by volatility and shifting market dynamics, Goldman Sachs Group, Inc. (NYSE: GS) has once again demonstrated its resilience and strategic prowess with its second-quarter 2025 earnings results, released on July 16, 2025. The investment banking giant, a cornerstone of Wall Street, delivered a performance that not only exceeded expectations but also underscored its ability to navigate economic uncertainties while capitalizing on growth opportunities. With net revenues reaching $14.58 billion for the quarter—a 15% increase from the same period in 2024—and net earnings of $3.72 billion, the firm has reinforced its position as a leader in global banking and markets. This strong showing, coupled with an updated valuation analysis that pegs the stock as undervalued under certain models, makes GS a compelling buy for investors seeking exposure to the financial sector.
The earnings report highlighted several key achievements that reflect Goldman Sachs’ diversified business model and operational efficiency. Global Banking & Markets, the firm’s largest segment, generated $10.12 billion in net revenues, up 24% year-over-year. This surge was driven by a 28% increase in investment banking fees to $2.19 billion, fueled by robust advisory activity in the Americas and Europe, Middle East, and Africa (EMEA) regions. Debt underwriting saw a slight dip due to reduced leveraged finance activity, but equity underwriting remained stable. The firm’s Fixed Income, Currency, and Commodities (FICC) operations contributed $3.47 billion, a 9% rise, with FICC financing showing significant growth in mortgages and structured lending. Equities revenues soared 36% to $4.30 billion, propelled by strong intermediation in cash products and derivatives, as well as portfolio financing.
Asset & Wealth Management, another pillar of Goldman’s operations, posted $4.38 billion in net revenues, down 3% from the prior year but up 3% sequentially. This segment benefited from higher management and other fees due to increased average assets under supervision (AUS), which climbed to $3.293 trillion by quarter’s end—a record high. Private banking and lending revenues also rose, supported by elevated net interest income. However, equity and debt investments saw declines, with lower gains from private equities and reduced net interest income from a smaller debt investments balance sheet. Platform Solutions, the firm’s consumer-facing arm, added $85 million in revenues, essentially flat but showing modest growth in consumer platforms.
These results translate into impressive profitability metrics. For the trailing 12 months (TTM) as of June 30, 2025, Goldman Sachs achieved a Return on Equity (ROE) of 12.22%, indicating efficient use of shareholders’ capital to generate profits. Similarly, the Return on Tangible Assets (ROTA) stood at 0.86% for the TTM period, reflecting solid asset utilization despite the firm’s asset-heavy balance sheet. These figures, sourced from Yahoo Finance and aligned with the latest earnings data, highlight Goldman’s ability to deliver returns even in a high-interest-rate environment. The annualized ROE for Q2 alone was 12.8%, while the first half of 2025 saw 14.8%, buoyed by a 1.6% increase in book value per common share to $349.74 during the quarter.
Management’s commentary during the earnings conference call emphasized the firm’s strategic focus on core strengths amid ongoing economic challenges. While no specific numerical forecasts were provided for Q3 2025 or the full year—consistent with Goldman’s cautious approach to guidance—leadership expressed optimism about the pipeline in investment banking and asset management. CEO David Solomon noted the strength in advisory fees and the record AUS, attributing it to favorable market conditions and client trust. He highlighted the firm’s capital return strategy, including a dividend hike to $4.00 per common share and $3.96 billion returned to shareholders in Q2 via repurchases and dividends. Solomon also touched on broader outlook themes, such as potential benefits from stabilizing interest rates and increased deal activity, but cautioned on forward-looking statements due to uncertainties like geopolitical risks and regulatory changes. Overall, the tone was positive, with an emphasis on sustainable growth and operational discipline.
This earnings beat comes at a time when the financial sector is grappling with mixed signals. Interest rates remain elevated, impacting lending margins, but a resurgence in mergers and acquisitions (M&A) and capital markets activity has provided a tailwind for firms like Goldman. The company’s investment banking backlog grew compared to both Q1 2025 and year-end 2024, signaling potential revenue acceleration ahead. Moreover, Goldman’s global core liquid assets averaged $462 billion in Q2, up from $441 billion in Q1, underscoring its liquidity strength in a regulatory-intensive environment.
Turning to valuation, an updated analysis using two established models—the Buffett-Inspired Valuation Method and the McGrew Valuation Method—paints GS as an attractive investment. Both methods adapt for financial services firms by focusing on Distributable Earnings (Net Income + Depreciation & Amortization – Capital Expenditures), rather than Free Cash Flow, to better capture the sector’s dynamics. Data was sourced from the Q2 2025 earnings release, historical CSVs (2020–2024), and Q1 2025 10-Q filings via SEC EDGAR.
The Buffett-Inspired Valuation projects Distributable Earnings with a 3% constant growth rate over 10 years, a 2.5% perpetual growth rate, and an 8% discount rate (4% Treasury yield + 4% premium). Terminal value is calculated as Year 10 Distributable Earnings × (1 + Perpetual Growth) ÷ (Discount Rate – Perpetual Growth). Enterprise Value sums discounted Distributable Earnings and terminal value, adjusted for net debt ($168 billion, incorporating restricted cash offsets for client funds). This yields an Intrinsic Value per Share of $481.44, with a 25% margin of safety price at $361.08.
The McGrew Valuation, suited for growth-oriented firms, uses a 5-Year Distributable Earnings CAGR of 30.3% (capped at 15% for Year 1), declining linearly to 6% by Year 7, then holding at 6% through Year 10. It applies the same perpetual growth and discount rates. This method produces an Intrinsic Value per Share of $1,070.40, with a 25% margin of safety at $802.80.
Note on how Valuations were calculated: Distributable Earnings for TTM ($15.633B) incorporate Q2 2025 Net Income ($3.72B) with estimated D&A ($0.5B) and Capex ($0.5B) based on trends. Historical data from CSVs; shares outstanding 311.8M. Adjusted Net Debt accounts for restricted cash ($13B) offsetting client-related liabilities. Limitations: Estimates for Q2 D&A/Capex (not in release); Derivative Gains/Losses assumed 0 (unavailable). No full Q2 10-Q yet.
The valuation table below summarizes the results:
| Stock Ticker | Valuation Method | Intrinsic Value per Share | Price with 25% Margin of Safety | Last Closing Price | Valuation Status |
| GS | Buffett-Inspired Valuation | $481.44 | $361.08 | $702.51 | Overvalued (45.9% above Intrinsic Value) |
| GS | McGrew Valuation | $1,070.40 | $802.80 | $702.51 | Buy (9.4% below Intrinsic Value) |
Export to Sheets
At a last closing price of $702.51 (as of July 16, 2025), GS trades 45.9% above the Buffett-Inspired Intrinsic Value, suggesting overvaluation under conservative assumptions. However, it is 9.4% below the McGrew Intrinsic Value, indicating a buy signal for those optimistic about growth. This divergence highlights the models’ sensitivities: Buffett-Inspired assumes modest growth, while McGrew allows for higher initial rates based on historical CAGR.
Goldman’s performance must be viewed in the context of broader industry trends. Peers like JPMorgan Chase and Morgan Stanley have also reported solid quarters, but Goldman’s 24% jump in Global Banking & Markets outpaces many. The firm’s efficiency ratio improved to 62.0% for the first half of 2025 from 63.8% a year ago, reflecting cost discipline amid rising compensation (up due to better performance) and transaction expenses. Headcount dipped 2% quarter-over-quarter, signaling ongoing optimization.
Regulatory and economic factors loom large. The Basel III endgame proposals could require higher capital reserves, potentially pressing ROE. Yet, Goldman’s CET1 ratio (a key capital measure) remains robust, supporting its $3.96 billion in Q2 capital returns. The firm repurchased 5.3 million shares at $564.57 average, reducing shares outstanding and boosting EPS.
Looking ahead, while management avoided hard numbers, Solomon’s remarks on a healthy backlog and AUS growth suggest momentum. Analysts project FY2025 EPS around $40–$45, implying forward P/E of ~15.6x at current prices—reasonable for a high-ROE firm. The dividend yield, post-hike, approaches 2.3%, appealing to income investors.
Investors should consider risks: Market volatility could dent trading revenues, and geopolitical tensions may slow M&A. However, Goldman’s diversified revenue (investment banking 15%, FICC/Equities 53%, asset management 30%) provides buffers.
Goldman Sachs’ Q2 2025 results affirm its blue-chip status. With TTM ROE at 12.22% and ROTA at 0.86%, the firm generates strong returns on capital. The McGrew Valuation’s buy signal, emphasizing growth potential, outweighs the conservative Buffett-Inspired view, making GS a buy for long-term holders. As Wall Street evolves, Goldman’s adaptability positions it for continued success.
