IPO & M&A Market Rebound: What it Means for Goldman's IB Business

Core Insights - Goldman Sachs is benefiting from the rebound in global deal-making activities, with its Global Banking & Markets division being the primary growth driver, accounting for 69.4% of total net revenues as of June 30, 2025 [1] Investment Banking Performance - In the first half of 2025, Goldman Sachs' investment banking fees increased by 8% year over year, with advisory revenues rising by 16%, debt underwriting revenues up by 2%, and equity underwriting revenues growing nearly 1% [2][11] - The firm maintains a leading position in announced and completed mergers and acquisitions (M&As), reinforcing its strength in the Global Banking & Markets sector [3] M&A and IPO Outlook - M&A activities are expected to remain strong in the second half of 2025, driven by higher stock valuations, pent-up demand, and corporate strategies for greater scale and competitiveness, supported by regulatory changes under the Trump administration [4] - The IPO market is also showing signs of vitality, particularly in technology and crypto-related offerings, with a solid IPO pipeline anticipated through the end of 2025 [5][6] Competitive Landscape - Morgan Stanley's investment banking business has seen a modest increase of 1% year over year, while JPMorgan's total investment banking fees grew by 9% in the first half of 2025, indicating a competitive environment [7][8] Stock Performance and Valuation - Goldman Sachs shares have increased by 27.7% year to date, outperforming the industry growth of 23.2% [9] - The Zacks Consensus Estimate for Goldman Sachs' earnings implies year-over-year increases of 12.6% and 14.9% for 2025 and 2026, respectively, with upward revisions in estimates over the past 30 days [14] - Goldman Sachs currently trades at a forward price-to-earnings (P/E) ratio of 14.64X, slightly above the industry average of 14.47X [17]