Goldman Sachs vs. Morgan Stanley—Which Stock Has More Upside?

Key Points

• Goldman Sachs maintained its position as the world’s top investment bank in 2024 in completed mergers and acquisitions, including the $35.9 billion acquisition of Kellanova by Mars for $83.50 per share.
• Goldman Sachs grew full-year 2024 revenues by 16% YoY to $53.51 billion with $14.28 billion in net earnings.
• Morgan Stanley had a blowout Q4 as revenues surged 25.9% to $16.23 billion, beating consensus estimates by over $1.2 billion. 

When it comes to the leading investment banks, Goldman Sachs Group Inc. NYSE: GS and Morgan Stanley NYSE: MS are often placed in the top five spots. Both are powerhouses for deals but also cater to different clientele with different risk appetites. Both are leaders in the finance sector and have tremendous success with their trading, wealth management, and underwriting services. Both banks posted blowout earnings with upbeat guidance, but which stock still has more upside?

Goldman Sachs: Masters of the Universe

Often dubbed the "Masters of the Universe," Goldman Sachs is the elite and clandestine top-tier investment bank that’s had a hand in some of the largest and most notable deals on Wall Street.

The firm advised one of the largest deals in 2024 when Mars acquired Kellanova NYSE: K for $83.50 per share in an all-cash $35.9 billion deal. The company posted eye-watering results. 

Its strong deal flow and lucrative advisory fees continue to reinforce its dominance in the industry. As M&A activity rebounds, Goldman Sachs remains well-positioned to capitalize on future high-profile transactions.

Crushing Wall Street Estimates (Again)

Goldman Sachs reported Q4 2024 EPS of $11.95 per share, crushing consensus analyst estimates by $3.74. Net earnings were $4.11 billion. Revenues surged 22.5% YoY to $13.87 billion, beating $12.36 billion consensus estimates.

The full-year 2024 EPS was $40.54, up from $22.87 in 2023. The full-year net revenues rose 16% YoY to $53.51 billion, and net earnings were $14.28 billion.

Solid Financial Metrics for 2024

Goldman’s Global Banking & Markets generated $34.94 billion in net revenues driven by record net revenues in Equities, Investment banking fees, and Fixed Income, Currency, and Commodities (FICC). Higher net revenues in Global Banking & Markets and Asset & Wealth Management spurred revenue growth. Provision for credit losses was $351 million, down from $577 million in Q4 2023 and sequentially from $397 million in Q3 2024. Goldman Sachs ranked #1 worldwide in announced and completed mergers and acquisitions in 2024. Assets under supervision grew 12% to a record $3.14 trillion.

Nextracker CEO Dan Shugar commented, "In the quarter, we successfully deployed several of our newly launched products and features at scale, expanding our total addressable market. In addition, we continue to increase our investment in R&D to drive rapid customer-centric innovation, ensuring our solutions remain at the forefront of solar technology while driving value for stakeholders worldwide."

Goldman Sachs CEO David Soloman commented about the reach of Goldman’s alumni, “Today, more than 275 of our alumni are in C-suite roles at companies with either a market cap greater than $1 billion or assets under management of over $5 billion and hundreds of other alumni end up coming back to the firm as Boomerang hires, including roughly 25 partners and managing directors last year alone, a testament to our enduring brand and culture.” Goldman Sachs shares are trading up 11.84% year-to-date (YTD) as of Jan. 31, 2025.

Morgan Stanley: Blue Shoe Investment Bank and More   

Goldman Sachs is arguably more risk-tolerant, whereas Morgan Stanley offers a more balanced approach with greater emphasis on wealth management to a wider clientele. Goldman Sachs Private Wealth Management clients are rumored to be required to have at least $10 million invested with the firm.

A Morgan Stanley Private Wealth Management account requires a purported minimum of $5 million for its ultra-high net worth clients. Morgan Stanley is a much larger firm with nearly double the number of associates worldwide, at 80,000.

Morgan Stanley also adopted a large retail and self-directed investor clientele from its acquisition of E*TRADE, which saw active traders grow above 2022 levels.

Morgan Stanley Crushes Q4 as Well

For Q4 2024, Morgan Stanley reported an EPS of $2.22, beating estimates by 52 cents. Revenues surged 25.9% to $16.23 billion, crushing consensus estimates of $15.03 billion by over $1.2 billion. The firm’s expense efficiency ratio was 71% versus 77% in the previous year, reflecting stronger expense discipline.

Solid Segment Metrics

Institutional Securities reported net revenues of $7.3 billion, up from $4.9 billion last year. Pre-tax income was $2.4 billion compared to $408 million last year. Equity net revenues surged 51% YoY, driven by increased client activity with regional strength in Asia and notable strength in Prime Brokerage. Fixed Income revenues grew 35% YoY, driven by credit on higher lending, securitization activity, and higher structured revenues in commodities. Client assets rose to $7.9 trillion, nearly tripling in the past three years. Fee-based flows in Wealth Management grew to $123 billion in 2024.

Morgan Stanley CEO Ted Pick commented on growing its retail segment, “We're going to continue to focus on checking accounts with competitive rates, integrating products into the client journey as they move along with E*TRADE to potentially a classic FA (financial advisor). And then, as you know, we've been really banging the drum on the workplace where we can partner with companies to reach employees.” Morgan Stanley shares are up 10.11% YTD as of Jan. 31, 2025.