Goldman Sachs reported a better-than-expected second quarter and provided an encouraging outlook for Wall Street dealmaking. Revenue in the three months ended June 30 rose 14.5% year over year to $14.58 billion, topping the consensus estimate of $13.47 billion, compiled by data provider LSEG. Earnings per share (EPS) increased 26.6% year over year to $10.91, well ahead of the $19.46 estimate, according to LSEG. GS YTD mountain Goldman Sachs YTD Goldman shares opened higher before quickly turning negative as the earnings call got underway; however, they have since fought their way to about breakeven. While we understand the desire to take profits — we did so ourselves back on July 7 at around $715 per share — we would advise members to look at pullbacks in the stock as a buying opportunity. We are reiterating our 2 rating but increasing our price target to $750 from $725. That new PT implies more than 6.5% upside to Wednesday levels around $703. The stock was less than 3% below its $723 record high on July 3 and up 22% year to date. Bottom line The expectation of a continued increase in initial public offerings and mergers and acquisitions is a core tenet of our Goldman Sachs investment thesis. On the post-earnings call, CEO David Solomon said, “The dealmaking environment has been remarkably resilient. While activity was slower in the first half of the quarter, announced M & A volumes for the year to date are 30% higher year over year, and 15% greater than the comparable five-year average. A narrowed range of outcomes on trade and the overall economy has helped CEO confidence and increased their willingness to transact.” Solomon also highlighted the firm’s participation in 11 IPOs during the quarter, including Chime , eToro , and Circle . In a post-earnings CNBC interview on Wednesday, Solomon said the CEOs he talks to believe that big mergers and strategic deals can actually get through the regulatory process under the Trump administration. He said that’s a welcome change from the chilling effect of the prior administration. Artificial intelligence also represents an opportunity for Goldman Sachs. “The accelerated innovation and disruption from AI is set to create significant demand for related infrastructure and financing needs, which will drive activity across our franchise,” Solmon said. “In light of the formation of the Capital Solutions Group, we’ve never been better positioned to meet this demand.” Earlier this year, Goldman created the Capital Solutions Group to better serve clients interested in private credit, private equity, and alternative asset classes. Why we own it Goldman Sachs is our bet on a rebound in dealmaking as the regulatory environment improves under President Donald Trump. Investment banking is a big part of Goldman. Initiation date: Dec. 19, 2024 Most recent buy: March 19, 2025 Competitors: Morgan Stanley , JPMorgan , Bank of America , and Citigroup Highlights from the reported quarter include a better-than-expected efficiency ratio, which fell 3.6 percentage points versus the year-ago period — lower is better here as the ratio is calculated as total non-interest expenses divided by net revenue. Return on tangible common equity and tangible book value per share also surpassed expectations. Taken together, these three metrics provide support for a higher valuation over time as clarity emerges on the path of the economy and trade negotiations — and, in turn, fosters an uptick in business confidence. Another positive indicator of the path ahead is the sheer amount of excess capital Goldman is sitting on, ending Q2 with a common equity tier 1 (CET1) ratio of 14.5%, materially above the 10.9% minimum ratio the firm will need to maintain as of Oct. 1, 2025, given the results of the recent Federal Reserve stress tests. Though Solomon did say during the Q & A session that having more capital doesn’t alter how the firm thinks about capital allocation, excess capital does provide the firm with more flexibility in terms of both organic and inorganic growth opportunities as well as shareholder returns in the form of dividends and stock buybacks. During the second quarter, Goldman repurchased 5.3 million shares, worth about $3 billion, and paid out $957 million to shareholders via dividends. Companywide assets under supervision hit a new record at $3.3 trillion, with about $115 billion coming from market appreciation and another $17 billion from long-term net inflows since the first quarter. This marks the 30th consecutive quarter of long-term, fee-based net inflows. To be sure, tariff uncertainty remains. We continue to think, however, that the better bet is on things ultimately working out, even if it’s a choppy path to get there, rather than betting on President Donald Trump blowing up the economy in the name of fair trade. Solomon thinks so, too, saying on the call, “There’s a sense that things are moving forward constructively, but developments rarely unfold in a straight line. With this in mind, we remain very focused on risk, discipline.” Commentary Within the global banking and markets division where revenue increased nearly 24% year over year to $10.12 billion, more than a billion dollars higher than expectations. That was, however, down 5% sequentially. Under banking and markets, investment banking revenue, which increased 26% year over year, benefited from “significantly higher” year-over-year advisory revenue, said the management, with particular strength in the Americas and EMEA, short for Europe, the Middle East and Africa. Debt underwriting revenue, however, was a slight offset, declining slightly due to lower leveraged finance activity. Equity underwriting was largely unchanged versus the year-ago period. Fixed income, currency and commodities revenue came in at $3.47 billion, 9% above last year’s level, and above the $3.25 billion expected. FICC financing revenue benefited greatly from increases in mortgages and structured lending. Equities revenue was very strong, increasing 36% year over year, with “significantly higher revenues” in both intermediation and financing, the company said. In asset and wealth management , revenue fell 3% from a year ago but was up 3% sequentially. The year-over-year decline can be attributed to lower revenue generation from both equity and debt investments, only partially offset by an increase in management and other fees . Private banking and lending fees , as well as incentive fees, were also higher versus the year-ago period. Platform solutions revenue outpaced expectations, increasing 2% versus the prior year period, though largely unchanged on a sequential basis. An increase in consumer platforms revenue was partially offset by a decrease in transaction banking revenue. (Jim Cramer’s Charitable Trust is long GS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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