Is GS a good stock to buy? We came across a bearish thesis on The Goldman Sachs Group, Inc. on r/investing_discussion by Variant_Invest. In this article, we will summarize the bears’ thesis on GS. The Goldman Sachs Group, Inc.’s share was trading at $1,032.01 as of June 9th. GS’s trailing and forward P/E were 18.85 and 17.54 respectively according to Yahoo Finance.
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The Goldman Sachs Group, Inc., a financial institution, provides a range of financial services for corporations, financial institutions, governments, and individuals in the Americas and internationally. GS is being framed as a mid-teens ROE compounder, but the underlying earnings power appears significantly weaker once non-recurring items and capital actions are adjusted for. The reported mid-teens return on equity is inflated by cyclical mark-to-market gains and periodic reserve releases, both of which are inherently volatile and not representative of sustainable fee-based earnings.
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At the same time, aggressive share repurchases have mechanically supported headline profitability by reducing equity, further masking the softness in core operating performance. Goldman Sachs’ exit from its Marcus consumer platform underscores the failure of its diversification push, with capital-intensive ambitions in retail lending ultimately proving value-destructive and strategically misaligned.
Stripped of these elements, the core franchise is increasingly concentrated in highly cyclical investment banking and trading activities, where earnings are far less predictable across economic cycles. This cyclicality raises concern that the market is overstating the durability of current profitability, particularly as benign capital markets conditions may not persist. If mark gains normalize lower and buyback support diminishes, reported returns could compress rapidly toward high single-digit levels, revealing a materially lower earnings base.
Against this backdrop, the market appears to be pricing in an overly stable earnings trajectory that is inconsistent with Goldman Sachs’ historical sensitivity to market cycles. The setup implies downside risk to valuation, with a bearish price target of $709 reflecting normalization of returns and fading cyclical tailwinds. Overall, the thesis suggests Goldman Sachs’ headline profitability is cyclical rather than structural, leaving earnings and valuation vulnerable as conditions normalize further.
Previously, we covered a bullish thesis on The Goldman Sachs Group, Inc. (GS) by LongYield in April 2025, which highlighted strong capital returns, resilient ROE, and broad-based strength across trading and banking segments. GS’s stock price has appreciated by approximately 106.79% since our coverage. Variant_Invest shares a contrarian view but emphasizes on cyclical earnings quality and inflated ROE driven by non-recurring gains and buybacks relative to current valuation.
The Goldman Sachs Group, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 83 hedge fund portfolios held GS at the end of the first quarter which was 78 in the previous quarter. While we acknowledge the risk and potential of GS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GS and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
