As the Wall Street earnings season kicks into high gear this January 2026, all eyes are on Goldman Sachs (NYSE: GS). The firm, which has spent much of the last two years pivoting away from its ill-fated foray into retail banking, is signaling a thunderous return to its roots. Analysts have recently pushed the Q4 2025 earnings estimate upward to a striking $11.69 per share, reflecting a newfound optimism in the global dealmaking environment and a streamlined corporate structure.

The upward revision, a 6% climb in just the last 30 days, underscores a significant shift in market sentiment. With global M&A volumes finally shaking off the lethargy of previous years, Goldman Sachs is positioned not just as a participant, but as the primary beneficiary of a renewed "megadeal" cycle. This surge in expectations comes as the firm successfully offloads legacy consumer liabilities, clearing the path for a focused pursuit of its core competencies: institutional banking and wealth management.

The Path to $11.69: Strategic Divestments and M&A Dominance

The road to this $11.69 EPS target has been paved with strategic exits and a relentless focus on high-margin advisory roles. A critical driver for the Q4 revision was the finalized agreement to transition the Apple (NASDAQ: AAPL) Card program to JPMorgan Chase (NYSE: JPM). This move alone is expected to contribute approximately $0.46 to the earnings per share this quarter, primarily through the release of loan loss reserves. While the exit involved some portfolio markdowns, investors have cheered the removal of a major distraction from Goldman’s balance sheet.

Throughout late 2025, Goldman Sachs maintained its iron grip on the top spot for global M&A advisory. The firm advised on 38 of the 68 global "megadeals" (transactions valued over $10 billion) announced in 2025, securing an estimated $4.6 billion in annual fees. This dominance was particularly evident in the third and fourth quarters, where investment banking fees surged by over 40% year-over-year. The timeline leading to this moment was marked by a steady "thawing" of the IPO market and a resurgence in private equity activity, providing a constant stream of revenue for the firm’s Global Banking & Markets division.

Market reaction has been overwhelmingly positive, with the stock trading near all-time highs of approximately $950 in early January 2026. This represents a staggering 70% return over the trailing twelve months. Institutional investors have increasingly viewed Goldman as the "purest play" on a rebounding capital market, rewarding the firm for its disciplined return to its "back-to-basics" strategy.

Winners and Losers in the New Dealmaking Landscape

While Goldman Sachs stands as the clear winner in the current environment, the ripple effects are felt across the entire financial sector. JPMorgan Chase (NYSE: JPM) also emerges as a winner, albeit in a different capacity, by absorbing the high-profile Apple Card partnership. This allows JPM to further cement its lead in the consumer credit space while Goldman focuses on high-net-worth individuals and corporate clients. However, the sheer momentum of Goldman’s advisory business has left some traditional rivals like Morgan Stanley (NYSE: MS) and Barclays (NYSE: BCS) fighting to keep pace in the league tables.

Morgan Stanley (NYSE: MS), while still a powerhouse in wealth management, has seen its investment banking growth slightly overshadowed by Goldman’s aggressive pursuit of the largest cross-border deals. On the losing side of this trend are smaller, boutique investment firms that lack the global balance sheet capacity to compete for the massive AI-driven infrastructure and energy transition deals that dominated late 2025. Furthermore, Wells Fargo (NYSE: WFC), while raising its price target on GS to $970, continues to face a steeper uphill battle to capture the same level of institutional fee revenue as it navigates its own regulatory hurdles.

The "Great Unlocking": Broader Industry and Regulatory Trends

The surge in Goldman’s earnings is not an isolated event but rather the flagship of a broader industry trend dubbed the "Great Unlocking." This phenomenon is driven by a massive backlog of deals that were delayed throughout 2024 and early 2025 due to interest rate volatility and political uncertainty. With rates stabilizing and a clearer regulatory path emerging in late 2025, the floodgates have opened. The softening of Basel III capital requirements—a significant policy shift in late 2025—has freed up billions in capital across the banking sector, allowing for more aggressive lending and underwriting.

This era of dealmaking is also being shaped by the "Innovation Supercycle" in Artificial Intelligence. M&A activity is increasingly concentrated in technology, as non-tech giants acquire AI startups and semiconductor infrastructure to remain competitive. Historically, such periods of rapid technological transition have benefited Goldman Sachs, which maintains the deepest talent pool in tech-focused advisory. Similar to the post-2008 recovery or the tech boom of the late 90s, the current market is rewarding firms that can navigate complex, multi-billion dollar integrations across global jurisdictions.

The Q1 Sprint and the Road Ahead

Looking forward, the short-term outlook remains exceptionally bullish. CFO Denis Coleman recently noted that the firm enters 2026 with one of its highest deal backlogs in three years. Analysts are bracing for a "Q1 Sprint," where long-gestating mergers in the healthcare and energy sectors are expected to reach the finish line. However, the firm must remain agile; the potential for new antitrust scrutiny in the tech sector or sudden shifts in global energy policy could still present challenges to the current M&A momentum.

Strategically, Goldman Sachs is likely to continue its pivot toward its Asset & Wealth Management (AWM) segment, which now oversees more than $3.5 trillion in assets. By growing its stable, fee-based revenue, the firm aims to reduce the earnings volatility that has historically plagued investment banks. If Goldman can maintain its 17.2x forward P/E ratio, it will signal a permanent re-rating of the stock, moving it closer to the premium valuations traditionally reserved for tech companies or high-growth asset managers.

Final Assessment: What Investors Should Watch

Goldman Sachs is entering its Q4 reporting cycle with the wind at its back. The revision to an $11.69 EPS is more than just a number; it is a validation of the firm's strategic retreat from consumer banking and its successful bet on a global dealmaking resurgence. For investors, the key takeaways are the firm's unmatched efficiency and its ability to capture the lion's share of high-fee advisory work during a market pivot.

Moving forward, the market will be watching two things closely: the pace of the "Great Unlocking" in the first half of 2026 and the firm's ability to maintain its leading margins in Asset & Wealth Management. While the stock's 70% run-up leaves little room for error, the fundamental drivers—recovering M&A, Basel III relief, and the Apple Card exit—suggest that Goldman Sachs is well-positioned for a sustained period of outperformance.

This content is intended for informational purposes only and is not financial advice.