Why are Goldman Sachs and Morgan Stanley's valuations higher now than before the 2008 crisis?

Their current valuations are higher due to a strong rebound in deal-making and trading, along with market expectations of future benefits from regulatory changes, even though current profitability is lower.

What is the current profitability of Goldman Sachs and Morgan Stanley compared to 2007?

While both banks reported strong Q4 2025 results, their current return on equity is significantly lower than the exceptional figures achieved in 2007.

How is Morgan Stanley shifting its revenue streams?

Morgan Stanley is increasingly focusing on wealth management, which now accounts for nearly 55% of its total revenue, indicating a move towards more stable income.

Home / Business and Economy / Goldman & Morgan Stanley: Record Results, Puzzling Valuations

Goldman & Morgan Stanley: Record Results, Puzzling Valuations

16 Jan

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Summary

Goldman Sachs and Morgan Stanley reported strong quarterly results.
Both banks now trade at multiples of book value exceeding pre-crisis levels.
Despite higher valuations, current profitability remains lower than in 2007.

Goldman & Morgan Stanley: Record Results, Puzzling Valuations

Wall Street giants Goldman Sachs and Morgan Stanley announced robust quarterly earnings, signaling a rebound in deal-making and trading activities. Goldman Sachs saw its net profit climb 12% to $4.6 billion, while Morgan Stanley achieved a 19% net income jump to $3.7 billion. These impressive figures have propelled their market valuations to new heights, with both banks now trading at multiples of book value that exceed their pre-financial crisis levels.

Despite this current financial success and elevated stock prices, a notable disconnect exists when comparing profitability. Goldman Sachs reported a nearly 15% return on equity last year, and Morgan Stanley exceeded 16%. These figures are substantially lower than their 2007 performance, when Goldman achieved nearly 27% and Morgan Stanley over 23%, indicating a less profitable operational environment today.