Cramer Backs Goldman Sachs: Strong Gains but Valuation & Regulation Pose Risks

Jim Cramer’s recent statements put Goldman Sachs among his largest charitable trust positions, and he emphasizes that Financials—particularly investment banks—have been one of the standout sectors in 2025. He claims Goldman Sachs is up between 56–57% year-to-date, compared to 43% for Morgan Stanley and ~35% for JPMorgan. These figures suggest investors are rewarding banks for a combination of strong trading revenue, deregulation, and robust mergers & acquisitions (M&A) and IPO/ECM activity. [1][2]

Corroborative data supports Cramer’s bullish view. Goldman’s second quarter results show a 36% year-over-year jump in equities trading to $4.3 billion and a 26% rise in investment banking fees to $2.19 billion. Earnings per share (EPS) were $10.91, beating expectations, with credit loss provisions rising modestly. Meanwhile, concern in other parts of the financial system (e.g. weaker AWM performance) suggests Goldman’s strengths are biased toward its capital markets businesses. [3]

Despite the strong performance, analysts are increasingly cautious. KBW downgraded GS from “Outperform” to “Market Perform” citing a muted start to 2025 deal-flow, inflation, tariffs, and policy uncertainty. Valuation is another concern: many price targets remain below current stock levels, implying limited upside. For example, Keefe, Bruyette & Woods raised GS’s target to $971 but still classified it as “Market Perform” (i.e., caution despite upside). [4][6]

Strategic implications for investors and stakeholders include:

• Regulatory tailwinds: Deregulation is central to Cramer’s thesis. If regulations tighten or enforcement increases (especially regarding IPOs, mergers, or financial oversight), GS’s upside may be constrained.
• Valuations under the microscope: Given many analysts see the stock trading near or above justified value, downside risk increases if revenues (especially from investment banking) disappoint.
• Dependency on deal-flow: Goldman’s outlook assumes sustained pickup in IPO/ECM and M&A activity. If macro headwinds—interest rate pressures, trade policy, or geopolitical risk—slow deal-making, GS may be vulnerable.
• Competition and risk diversification: As Goldman focuses on capital markets and AWM, its exposures to market volatility increase, while more diversified peers may show more stability. Goldman’s exits from consumer banking also change its risk profile. [7]

Open questions worthy of close monitoring:

• Can Goldman maintain or grow its margins in trading and investment banking if market volatility recedes?
• How much benefit is already priced in, given GS’s strong YTD return pairing with elevated valuation multiples?
• Will policy and regulatory environments remain favorable, including around IPO approvals, merger permits, and capital markets access?
• How sustainable is GS’s growth in its asset & wealth-management division as it becomes a larger revenue base?