Goldman Sachs GS) kicked off the Q1 earnings season with a bang on Monday, with outcomes from Citigroup C), JPMorgan JPM), Wells Fargo WFC), and BlackRock BLK) set to roll in tomorrow.
Setting the bar excessive, Goldman had one of many strongest quarters in its storied historical past whereas embarking on some of the vital AI deployments within the banking sector.
This makes it a compelling case to think about shopping for Goldman’s inventory on the dip, with GS up a convincing 75% over the past 12 months, however buying and selling 10% from its 52-week and all-time excessive of $984 a share, which it hit in January.
Picture Supply: Zacks Funding Analysis
Goldman’s Very good Q1 Outcomes
Posting Q1 gross sales of $17.22 billion, Goldman’s high line expanded 14% 12 months over 12 months to the second-highest quarterly degree within the agency’s historical past and comfortably surpassed estimates of $16.97 billion. The standout driver of the quarter was document equities buying and selling income, which spiked 27% YoY to $5.33 billion.
Income from funding banking charges additionally stood out, spiking 48% to $2.84 billion, pushed by a surge in M&A advisory exercise and stronger fairness underwriting. Moreover, Asset and Wealth Administration section income elevated 10% to $4.08 billion. That mentioned, there have been some areas the place Goldman’s efficiency lagged, together with fastened earnings buying and selling income falling 10% YoY to $4.01 billion, and credit score loss provisions had been up practically 10%, greater than double analyst expectations.
Nonetheless, Goldman posted its second-highest mark in quarterly internet earnings as nicely at $5.63 billion, a 19% enhance YoY. This translated into Goldman’s second-highest quarterly EPS of $17.55, beating expectations of $16.34 by 7% and spiking 24% from $14.12 per share in Q1 2025.
Notably, Goldman has now surpassed the Zacks EPS Consensus for 10 consecutive quarters, posting a mean EPS shock of 13.09% in its final 4 quarterly studies.
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Strategic AI Partnership With Anthropic
Goldman has been embedding Anthropic engineers contained in the financial institution for months, co-developing autonomous AI brokers primarily based on Anthropic’s Claude fashions.
These brokers are being constructed to automate advanced, high-volume, rules-driven monetary duties akin to commerce and transaction accounting, regulatory compliance checks, consumer vetting and onboarding, and document-heavy workflows that require logical reasoning.
Goldman’s CIO Marco Argenti has repeatedly confirmed the collaboration, describing Claude as a “digital co-worker” able to dealing with work that beforehand required massive groups. The strategic partnership is signaling a shift in how Wall Road approaches back-office automation, with Goldman successfully utilizing Anthropic’s fashions as a foundational intelligence layer for mission-critical operations that’s prone to improve its already stellar operational effectivity.
Monitoring Goldman’s Valuation
Regardless of such an exhilarating rally over the past 12 months, GS is buying and selling at 15X ahead earnings, which is roughly on par with its Zacks Monetary-Funding Financial institution Trade common and nonetheless gives a noticeable low cost to the benchmark S&P 500.
Like lots of its funding banking friends, GS trades close to the usually most well-liked degree of lower than 2X ahead gross sales with the S&P 500 at virtually 5X.
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Backside Line
Goldman Sachs simply delivered one of many strongest quarters in its historical past and is positioning itself on the forefront of enterprise AI adoption by way of its deepening partnership with Anthropic. Collectively, this creates a compelling case for maintaining Goldman’s inventory within the portfolio, with GS presently touchdown a Zacks Rank #3 (Maintain).
Buying and selling at an affordable valuation, GS gives a decent 1.98% annual dividend yield, and administration reaffirmed confidence in long-term development, citing sturdy consumer engagement and diversified enterprise momentum. Moreover, a purchase score might be on the best way as EPS estimates for FY26 are prone to rise within the coming weeks and probably for FY27 as nicely.
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The Goldman Sachs Group, Inc. (GS) : Free Inventory Evaluation Report
Wells Fargo & Firm (WFC) : Free Inventory Evaluation Report
JPMorgan Chase & Co. (JPM) : Free Inventory Evaluation Report
Citigroup Inc. (C) : Free Inventory Evaluation Report
BlackRock (BLK) : Free Inventory Evaluation Report
This text initially printed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
