Shares of financial giant Goldman Sachs (NYSE:GS) have soared by over 60 percent in the last year, outpacing even many of the mega-cap tech stocks that have powered the returns of the S&P 500. With GS rising so quickly, however, its valuation has started to look somewhat strained. Is Goldman Sachs going to keep going up, or have GS shares reached their logical highs for the time being?
Goldman Sachs Growing Like a Weed
2025 proved to be a year of decent growth in terms of revenue at Goldman Sachs, though the growth was somewhat unevenly spread across its various business segments. Overall, Goldman’s revenues for the full year rose 9 percent to $58.3 billion, powered overwhelmingly by an 18 percent growth in revenue from Global Banking & Markets. Asset & Wealth management remained nearly flat, turning in just 2 percent revenue growth, while Platform Solutions net revenue fell to just $151 million from over $2.1 billion in 2024.
Of particular note is the growth of revenue from investment banking fees, which rose 21 percent year-over-year to $9.3 billion in 2025. Though not quite as high, investment management delivered an 11 percent year-over-year revenue growth rate, rising to $11.7 billion.
Even more impressive than the revenue growth, though, was a surge in Goldman Sachs’ earnings per share. EPS for the full year rose to $51.32 against 2024’s EPS of $40.54, a gain of 26.6 percent. Goldman was also able to deliver a 15.0 percent year-over-year return on equity for the full year, a rate which rose to 16.0 percent in Q4.
Looking forward, Goldman Sachs could keep performing reasonably well in the year to come. Financial businesses tend to do reasonably well during periods of economic expansion, and Goldman itself projects that 2026 will deliver consensus-beating GDP growth of 2.5 percent as the stimulative effects of tax cuts and lower interest rates kick in. Indeed, the growth rate could even be slightly higher than projected, as the Supreme Court could be poised to rule against some of the tariffs that have exerted a negative impact on the economy over the last several months.
Is Goldman Sachs Stock Overvalued?
Thanks to its sharp rise over the past year, GS is currently trading at 19.0 times earnings, a significant premium when one takes the sector average P/E of 12.3 into account. Analyst price targets also suggest that GS could be slightly overvalued. The consensus target for the stock is $893.79, and Goldman Sachs has risen almost 9 percent above that level to $975.86. Right now, the stock carries a consensus rating of hold.
This high valuation, however, makes a bit more sense when the expected earnings growth rate for Goldman Sachs is factored in. During the next 3-5 years, analysts are expecting compounded EPS growth of a little over 15 percent annually. Extrapolating from this, GS would currently be trading at approximately 16.5 times its expected earnings one year out and about 12.4 times its earnings in three years’ time.
Ultimately, it seems more likely that GS is trading at a more or less fair value than that it is significantly overvalued. While investors are currently paying a somewhat high price for Goldman Sachs, both the performance of the business over the last year and its expected growth during the next several suggest that the premium could be justified. With that said, it bears mentioning that institutional selling activity has strongly outweighed buying since early last year, potentially indicating some apprehension about Goldman’s valuation among institutional buyers.
Is GS Dividend Worth It?
Another factor that’s important to note about Goldman Sachs is its respectable dividend yield, which currently stands at 1.5 percent. Though the yield itself isn’t massive, Goldman’s payout ratio is just 32.6 percent, a fact that could give management a great deal of room to raise the distribution in the future. It is worth noting, however, that the dividend yield is at about the lowest it has been since 2021 as a function of the rapid increase in share prices over the past year.
GS has been a strong dividend growth asset for the past 10 years, with a compounded annual dividend growth rate of more than 18 percent during that period. Goldman raised its dividend again at the same time it released its Q4 report, increasing the quarterly payout from the previous level of $4.00 to $4.50.
It’s also worth keeping in mind that Goldman Sachs has recently put a particular emphasis on returning cash to its shareholders through share buybacks. In 2025, the business spent nearly $12.4 billion to buy back about 18.9 million of its own shares. For reference, the total amount spent on dividends during the year was a comparatively modest $4.4 billion. Goldman still has about $32 billion in remaining buyback authorization, translating to almost 11 percent of its present market cap.
Will Goldman Sachs Keep Going Up?
Although GS is currently trading at a bit of a premium price tag, the business’s recent performance suggests that the stock could be worth paying for. With a year of moderate economic growth likely ahead and the stock market expected to keep advancing, Goldman Sachs and other financial stocks could gradually creep higher, especially as investors look for alternatives to much pricier tech stocks.
In addition to a respectable level of net income growth going forward, shareholders will likely see Goldman Sachs continue to build value through a combination of dividend growth and strategic share buybacks. With earnings set to rise at double-digit percentages and the payout ratio already quite low, management will likely have quite a lot of latitude for further dividend increases over the coming few years.
Although GS appears quite unlikely to replicate the extremely rapid gains of the past year, the stock could have more room to run in 2026 as earnings grow and interest rates fall. Coming off of a strong Q4 and full year in 2025, Goldman Sachs may prove to be a winner in the financial sector as 2026 progresses.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.