The Goldman Sachs Group, Inc.

▲ Bull Case

• ◆AWM mix shift accelerates and Solomon delivers explicit 40%-of-profits-by-FY2030 framework at investor day, re-rating multiple toward Morgan Stanley parity (2.5x P/B+). AUS reaches $4.5T by FY2027 with $13B+ recurring fees; through-cycle ROTCE sustains 18–19%. Implied target $1,150–$1,250 (+15–25%).
• ◆IB super-cycle persists 2+ years rather than 1 year. 2026–2027 both peak years delivers FY2027 EPS at sell-side consensus $66.81 vs. our base $54–58. PWFV moves to ~$960 and bull case $1,200 carries 35–40% probability instead of current 20%.
• ◆Capital return remains exceptional: ~$22–26B/year = 7.5–8.8% yield at current price. Share count -3.8% CAGR through FY2030E = -18% reduction. Combined with 4–6% TBV growth, total return floor is 12–14%/year from capital structure alone.

▼ Bear Case

• ◆IB cycle reverts to mean in FY2027 (the most likely bear scenario). Historical cycles last 2–4 years at peak; M&A backlog largely executed. If advisory drops 40% from peak, FY2027 EPS falls to $44–50, P/TBV compresses to 1.4–1.6x, stock targets $520–590 (-40–45%). Market prices 0% probability of this outcome.
• ◆Multiple compression from 3.02x P/TBV is asymmetric. GS is at the historical ceiling of the bulge-bracket peer set (MS 2.49x, JPM 2.45x). Rarely sustained above 2.0x P/TBV historically. Even normal de-rating to 2.0–2.2x without earnings cuts implies 25–30% downside.
• ◆Severe scenario (recession + financial stress) has 5–10% probability. ROTCE drops to 5–8%, TBV impairment 5–10%, P/TBV compresses below 1.0x → $210–270 target (-75–80%). At current 3.0x P/TBV entry, this tail risk is more painful than at $610 entry; financial leverage is non-linear.

“Is GS's current valuation—at parity with Morgan Stanley on P/TBV (~3.0x), having closed the historical GS discount—sustainable as AWM mix shift proceeds, or does the IB-heavy revenue base (~65% GBM today, 60% by FY2030E) structurally cap GS's multiple at the historical bulge-bracket band (1.5–2.0x P/TBV)? Bull side: GS is structurally improved (consumer exit complete, AWM recurring fees growing $1B/year, ROTCE above target, deserves MS multiple). Bear side: GS revenue 65–70% cyclical (IB+trading) vs. MS 55% recurring AWM; historical relationship had GS at discount due to cyclicality; current 3.0x reflects peak Q1 2026 extrapolation; mean-reversion is base case. Reverse-implied math requires 19–25% sustained ROTCE, well above 12–15% cycle history. We model FY27 EPS $54–58 vs. consensus $66.81. Debate resolves over 4–6 quarters via FY26 full-year ROTE proof and whether Solomon publishes explicit AWM roadmap.”

• ◆Q2/Q3 2026 IB fees sustain >$2.5B/quarter (CAT-01): +5–10%; failure <$1.8B triggers reversion scenario
• ◆AWM AUS reaches $4.0T+ by FY26–FY27 (CAT-02): +3–5%; underpins $13B+ recurring mgmt fees thesis
• ◆FY26 full-year ROTE proof ≥13% floor by Jan 2027 (CAT-03): +5–8%; validates structural improvement thesis
• ◆Solomon publishes explicit AWM 40%-of-profits-by-FY2030 roadmap at investor day (CAT-06): +10–15% multiple re-rate if framework disclosed
• ◆Global M&A sustains 2026 run rate at $6T+ (CAT-08): +/-8–12%; backdrop for IB fee sustainability
• ◆P/TBV re-rating dynamics above/below 3.0x (CAT-04): +/-15% based on earnings support
• ◆Basel III Endgame final rules confirm soft outcome <10% RWA add (CAT-07): +/-3–5%
• ◆IPO mega-cycle with $2B+ deals where GS leads (CAT-05): +3–5% per deal

• ◆IB cycle reversion (EX-01, 50–60% probability over 3 years): advisory -30–50% from peak; FY27 EPS $44–50; stock target $520–590 (-40–45%). Market prices 0% of this outcome.
• ◆Multiple compression from 3.02x P/TBV: GS at historical ceiling of peer set; even normal de-rating to 2.0–2.2x without earnings cuts = 25–30% downside.
• ◆Trading volatility (EX-02, ongoing): FICC -10–20% in low-vol regime (Q1 2026 already occurred); equities offset historical but not always.
• ◆Financial stress/credit event (EX-04, tail risk, 5–10% over 3 years): ROTCE 5–8%, TBV impairment 5–10%, P/TBV <1.0x → $210–270 target (-75–80%).
• ◆AWM outflows in risk-off (EX-05, 20–30% probability): offsets structural AWM mix-shift thesis.
• ◆Reverse-implied 19–25% ROTCE required at $996 is historically unrealistic: above peak Q1 2026 and unsustainable over full cycle.
• ◆Solomon departure or governance event: combined Chairman/CEO; $80M retention awards drew ISS/Glass Lewis opposition; succession risk to franchise.