Goldman Sachs just delivered the second-highest quarterly net revenues in its 157-year history, and the stock is roughly 24% below where it traded at its 2026 high. That gap deserves an explanation.
Why This Stock Now
Goldman reported Q3 2026 net revenues of $18.68 billion, up 23% year-over-year, alongside diluted earnings per share of $17.01, a 39% year-over-year increase. The firm beat Wall Street’s EPS estimate of $13.09 by nearly $4 a share. Yet GS closed October 16 at $881.26 with a trailing price-to-earnings ratio around 13 times, a discount that looks out of place for a business generating this kind of return on equity.
The Business
Goldman makes money advising companies on mergers, underwriting equity and debt, trading securities, and managing wealth. The advisory franchise is the franchise. The firm maintained its long-standing number one position in M&A, advising on $1.5 trillion of announced transactions for the year. That lead over its nearest competitor is the largest Goldman has ever recorded.
Equities net revenues soared 72% to $6.4 billion, the second-best quarter ever, with equities financing revenues up 96% to a record on elevated prime balances and strong activity in Asia. The wealth management unit contributed too: long-term net inflows annualized at 12%, well ahead of the 5% target, and alternative assets under supervision grew 26% to a record $491 billion.
Why Wall Street Is Paying Attention
The deal pipeline is the forward indicator that matters most. On the Q3 call, Goldman CEO David Solomon said “there’s an enormous amount of dialogue that continues” and that the backlog is “incredibly robust,” pointing to companies moving proactively to take advantage of a friendlier regulatory environment. Deals delayed in September due to valuation gaps are not being abandoned. Banks say most transactions are being delayed rather than abandoned, with U.S. boardroom dialogue on mergers, acquisitions, and capital raising still active.
Year-to-date figures were even more impressive, with net revenues of $56.244 billion representing record levels for the nine-month period. The analyst consensus price target sits at $1,037.90, representing more than 16% upside from the current price. Several firms including TD Cowen, Argus Research, and Bank of America maintain Buy ratings with targets between $1,280 and $1,300.
What’s Driving the Opportunity
The durable revenues argument is real. More durable revenues have more than doubled since Goldman’s 2020 Investor Day and now represent approximately 45% of revenues for the year to date. That shifts the business mix away from volatile trading income and toward recurring fee streams, exactly what the market pays a premium multiple for in other financial companies.
The current earnings multiple reflects neither the record advisory backlog nor that recurring revenue shift. Argus Research put a $1,280 target on GS after Q3, citing what it called strong activity in investment banking.
What Could Go Wrong
The IPO market is the clearest near-term risk. Reuters reported that a string of postponements by high-profile hopefuls, including nuclear technology company Holtec and smart ring maker Oura, has weighed on the fall IPO market. Rising bond yields are making valuation gaps harder to close. Reuters reported that global M&A volume fell 41% from the prior quarter to $993 billion in Q3, dropping below $1 trillion for the first time since Q2 2025 as megadeals declined.
Equities revenue at near-record levels is inherently difficult to repeat, and any significant market dislocation could hit prime brokerage balances quickly. The stock’s beta of about 1.28 means it amplifies both the upside and the downside.
The Bottom Line
Goldman Sachs is trading at a trough multiple on peak earnings, with a record advisory backlog ahead of what management describes as one of the most active deal environments in years. The 24% pullback from its 2026 high reflects macro anxiety about rate-sensitive financial stocks, not anything wrong with the business itself. At roughly 13 times trailing earnings, with $56 billion in year-to-date net revenues at record levels and a pipeline Solomon calls “incredibly robust,” GS offers a rare combination: a quality franchise at a value price.
