Goldman Sachs Q2 Profit Jumps

The Goldman Sachs Group, Inc. (NYSE:GS) reported Q2 2025 results on July 16, 2025, with net revenues of $14.6 billion, EPS of $10.91, and ROE of 12.8%.

The board approved a 33% dividend increase to $4 per share, assets under supervision hit a record $3.3 trillion, and regulatory developments have boosted both capital flexibility and strategic execution across key segments.

Insights below examine the firm’s evolving capital deployment, leadership in investment banking, and operational advancements in technology and client coverage.

Material Strategic Capital Flexibility and Deployment

The firm’s Common Equity Tier 1 (CET1) ratio was 14.5% at quarter-end, with a stated intent to operate with a 50–100 basis point buffer above required levels. Management emphasized that after prioritizing capital deployment towards accretive growth and client franchise support, return of capital via dividends and repurchases remains a core ongoing priority; Q2 2025 saw $4 billion returned to shareholders, including $3 billion in share repurchases.

"Given the way things are shifting, we are seeing some opportunities for deployment. Some of that comes from the structure of the capital stack, and some of that comes from the fact that activity is picking up particularly in M&A and financing in places we haven't had to put that much capital forward. So we do see good opportunities in the business to deploy. That will be our first and primary focus. After that, we'll continue to look for ways to return capital. We've been committed to growing sustainably and meaningfully increasing our dividend as we've had more confidence in the durability of the business."
— David Solomon, Chairman and Chief Executive Officer

This surplus capital enables broad organic investment, strategic bolt-ons, and aggressive shareholder returns.

Investment Banking Dominance and Resilient M&A Activity

Advisory revenues rose 71% year over year, to $1.2 billion, with announced M&A volumes up 30% year to date and 15% above the five-year average year to date, and completed deal volumes leading the industry by $145 billion over the closest peer year to date.

The advisory backlog increased for a fifth consecutive quarter, outpacing 2024 year-end levels, while the M&A franchise continues to secure top-three rankings with 125 of its top 150 clients globally, up from 77 in 2019.

"For the year to date, we remain number one in the lead tables for M&A, with a lead of roughly $85 billion in announced volume, and $145 billion in completed volumes versus our next closest peer."
— Dennis Coleman, Chief Financial Officer

Sustained outperformance in advisory signals not only revenue visibility but reinforcing competitive advantages in client access and the ability to monetize industry consolidation.

Operational Scale Through Technology and Integrated Client Coverage

Assets under supervision reached a record $3.3 trillion following $115 billion in market appreciation and $17 billion of long-term net inflows in alternatives and equity for the quarter.

Product development and technology investments accelerated, with the launch of the internal GS AI assistant and a new partnership with Cognition Labs to pilot generative AI agents for operational efficiency and software engineering transformation.

"Last month, we rolled out our natural language GS AI assistant to the entire firm, the first generative AI-powered tool to reach the scale allowing for safe, secure, and responsible access to firm-approved external large language models. We recently began collaborating with Cognition Labs and are piloting the usage of Devan, an autonomous generative AI agent designed to transform the way we build, maintain, and develop software, with risk oversight and supervision of our engineers. We will be deploying these agentic AI developers for prioritized use cases, which we believe will significantly enhance velocity, transform our capabilities, and drive efficiency."
— David Solomon, Chairman and Chief Executive Officer

AI adoption across revenue and operational processes is expected to structurally reduce cost, accelerate innovation, and materially enhance productivity.

Looking Ahead

Management expects management and incentive fees to ramp up meaningfully in 2026 and 2027 and targets sustained mid-teens ROE in the medium term, leveraging operational and capital flexibility. No new explicit earnings or revenue targets were issued; guidance was reiterated for a 22% full-year tax rate and further share repurchases under the existing $40 billion program.

Significant near-term capital deployment and inorganic growth will remain highly selective, with a persistent focus on core franchise scaling and ongoing advocacy for transparent capital regulation.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.