Goldman Sachs' 2026 IB Revenue Outlook and Capital Deployment Priorities Clash in Q4 Earnings Call

Date of Call: Jan 15, 2026

Financials Results

• Revenue: Q4: $13.5B; Full Year: $52.1B (up 18% YOY)
• EPS: Q4: $14.01; Full Year: $51.32 (up 27% YOY)

Guidance:

• Expect tax rate of approximately 20% for 2026.
• Anticipate double-digit growth in alternative management and other fees.
• Expect fee-paying alternative assets under supervision to reach $750 billion by 2030.
• Target $1 billion in incentive fees annually.
• Pretax margin target for Asset & Wealth Management increased to 30%.
• Long-term target of 5% annual net inflows in wealth management.
• Expect to raise between $75B and $100B annually in alternatives.
• Buybacks remain an important tool; have $32B of remaining buyback capacity.
• Dividend increased to $4.50 per quarter ($0.50 increase).

Business Commentary:

Strong Financial Performance:

• Goldman Sachs reported earnings per share of $14.01 for Q4 2025, with an ROE of 16% and ROTE of 17.1%. For the full year, earnings per share were $51.32, a 27% increase from the previous year.
• The growth was driven by a significant increase in firm-wide revenues, improved returns, and a strong performance in Global Banking & Markets and Asset & Wealth Management segments.

Investment Banking Leadership:

• Goldman Sachs maintained its position as the #1 M&A adviser in investment banking, with $2.6 billion in investment banking fees in Q4, up 25% year-over-year.
• The leadership in M&A is attributed to strong client relationships and high levels of client engagement, with expectations of accelerated activity in 2026.

Asset & Wealth Management Growth:

• The firm's Asset & Wealth Management revenues reached $16.7 billion for 2025, with a pretax margin of 25%.
• Growth was driven by strong performance in management and other fees, private banking and lending revenues, and record fundraising in alternatives.

Risk Management and Capital Strength:

• Goldman Sachs reported a 320 basis point improvement in its stress capital buffer, with a common equity Tier 1 ratio of 14.4% at the end of Q4 2025.
• This improvement was due to multiyear efforts to scale capital-light businesses and reduce capital intensity, enhancing the firm's resilience.

Strategic Focus and Efficiency:

• The firm announced a $0.50 increase in its quarterly dividend to $4.50 and has $32 billion of remaining buyback capacity.
• These actions reflect the firm's focus on strategic capital deployment and efficiency improvements, supported by a strong earnings generation capability.

Sentiment Analysis:

Overall Tone: Positive

• CEO expressed being 'very pleased with our strong performance' and 'incredibly proud of what we have delivered.' He stated the firm is 'positioned to capitalize on a cyclical upswing' and 'optimistic on the forward outlook.' Management highlighted 'record revenues,' 'strong execution,' and 'solid momentum,' with confidence in exceeding return targets in the near term.

Q&A:

• Question from Glenn Schorr (Evercore ISI): How do you plan to scale wealth from here, including aspirations for the rest of wealth beyond ultra-high net worth?
  Response: Will stick with ultra-high net worth wealth, invest in broadening footprint, and scale through third-party wealth channels (RIAs, partnerships) leveraging strong asset management and product manufacturing capabilities.

• Question from Glenn Schorr (Evercore ISI): What's your level of confidence you've raised the floor for returns given recent execution, and how much have you raised the floor?
  Response: Confident they have meaningfully raised the floor; the firm is bigger, more diversified, and better positioned in downturns than before, with durable revenues supporting mid-teens returns through the cycle.

• Question from Ebrahim Poonawala (BofA Securities): Given regulatory changes and productivity focus, is it fair to assume the business is rebasing to high teens returns?
  Response: Reaffirmed mid-teens return target but have potential to exceed it; Asset & Wealth Management target now set at 30% pretax margin, driving higher returns, while regulatory burdens easing frees capacity for growth investments.

• Question from Ebrahim Poonawala (BofA Securities): Is this the right time for transformational M&A to shift business mix towards AWM?
  Response: Bar for transformational M&A is very high; focus remains on accelerating AWM growth through strategic partnerships and small acquisitions (like T. Rowe Price, Industry Ventures, Innovator) rather than large transformations.

• Question from L. Erika Penala (UBS): In terms of the capital market cycle ahead, what inning are we in, and how does 2026 compare with 2021?
  Response: Believe 2021 is not the ceiling; 2026 setup is incredibly constructive for M&A and capital markets, with base-case advisory volumes near 2021 levels, though equity capital markets may remain below 2021 peaks.

• Question from L. Erika Penala (UBS): How should we think about buybacks given excess capital and strong organic capital generation?
  Response: Buybacks remain an important tool; will be opportunistic but strategic, aiming to reduce share count sustainably to drive EPS growth while prioritizing funding client activity.

• Question from Betsy Graseck (Morgan Stanley): How are equities and FICC revenues aligned with issuance calendar, and how much issuance helps those line items?
  Response: Primary market activity enhances secondary market liquidity; increased capital markets activity expected to catalyze more intermediation activity across FICC and equities.

• Question from Betsy Graseck (Morgan Stanley): Can you unpack the backlog and what to expect released into production in 2026?
  Response: Backlog (highest in 4 years) is driven by advisory and indicates more than replenished recent strong results; advisory growth can drive a flywheel of activity across the firm.

• Question from Brennan Hawken (BMO Capital Markets): How should we think about Platform Solutions run rate and operating expenses after Apple Card closes, and what about deposits?
  Response: Apple Card transition expected to result in small pretax loss in segment but immaterial to firm; savings program remains with Apple; deposits diversified, savings deposits a small fraction.

• Question from Brennan Hawken (BMO Capital Markets): Why did efficiency ratio worsen YoY in Q4, and what prevented greater operating leverage?
  Response: Apple Card revenue reduction impacted efficiency ratio; must view full year results (2025 showed significant operating leverage with 9% revenue, 19% pretax, 27% EPS growth) and Q4 was affected by comp accrual differences.

• Question from Michael Mayo (Wells Fargo Securities): What specific output or metrics do you hope to achieve with AI and One Goldman Sachs 3.0?
  Response: Focused on driving productivity and efficiency through AI to free up capacity for growth investments; will provide more metrics in coming quarters after initial process reengineering.

• Question from Michael Mayo (Wells Fargo Securities): What metric would indicate progress in 5 years?
  Response: Revenue per employee is one metric, but overall focus is on accelerating productivity gains from technology and process improvements.

• Question from Steven Chubak (Wolfe Research): How are you evaluating emerging market structure opportunities like tokenization and prediction markets?
  Response: Actively evaluating both (tokenization, prediction markets) with teams analyzing regulatory and business opportunities; see potential for derivatives and client services, but pace of change may be slower than some expect.

• Question from Steven Chubak (Wolfe Research): How large can the financing opportunity grow, and how do you manage risk?
  Response: See potential to grow financing via asset management (Capital Solutions Group), allowing client access without all on-balance-sheet; focused on risk management as part of evolution.

• Question from Daniel Fannon (Jefferies): How does noncompensation expense growth look for 2026 versus 2025?
  Response: Will maintain rigorous focus; transaction-based and T&E expenses may grow with activity, while other controllable expenses will be constrained.

• Question from Daniel Fannon (Jefferies): What's the outlook for private banking and lending in 2026 with falling rates?
  Response: Expect to grow lending and deposits; NIM compression expected due to rate cycle, but lending penetration remains a focus for wealth growth.

• Question from Matthew O'Connor (Deutsche Bank): How did you arrive at the 5% long-term wealth flow target, and how much is from existing vs. new advisers/customers?
  Response: Target is a signal to drive accountability; wealth is a big opportunity with room to grow market share by adding advisers and footprint, and enhancing client mix and digital experience.

• Question from Gerard Cassidy (RBC Capital Markets): What's driving the IPO market outlook for 2026—is it market conditions or valuation challenges?
  Response: Not a valuation challenge; expect sponsor activity to unlock and larger private companies to go public, creating constructive conditions.

• Question from Gerard Cassidy (RBC Capital Markets): Are executives factoring in regulatory support for M&A into their timing?
  Response: Yes, CEOs see a window for strategic consolidation and are more front-footed, leading to increased M&A activity reflected in backlog.

• Question from Christopher McGratty (KBW): Can you quantify the potential pool of money freed up by deregulatory expenses?
  Response: Will not quantify, but freed-up capacity from reduced regulatory burdens can be redeployed to growth; look at SCB reductions, Basel III neutrality, and G-SIB recalibration as factors.

• Question from Christopher McGratty (KBW): What will the revenue mix look like in coming years?
  Response: Mix will continue to shift towards Asset & Wealth Management as it grows faster organically and through disciplined M&A, though pace is slower due to scale of Global Banking & Markets.

• Question from Saul Martinez (HSBC): Regarding investment banking cycle, were you referring to total IB fees or just advisory/DCM when suggesting 2026 could approach 2021 levels?
  Response: Referred specifically to advisory volumes; equity capital markets likely below 2021 peaks but higher than 2025.

Contradiction Point 1

Investment Banking Revenue Cycle Outlook

Contradiction on whether 2026 investment banking revenue will surpass the 2021 peak, a critical benchmark for the business cycle.

Okay, let's tackle this query. The user wants me to rewrite an earnings call question into a concise one. The input is: "What inning are we in for the capital market cycle ahead? Compare 2026 preconditions to 2021. Also, how should we think about buybacks given ample capital?" First, I need to understand the main points here. The original question has two parts. The first part is asking about the current stage (inning) of the capital market cycle, specifically comparing 2026's conditions to 2021. The second part is about how to approach buybacks when there's ample capital.The user wants a concise question, so I need to combine these elements without losing the core meaning. The phrase "What inning are we in" is a metaphor for the stage of a cycle, so I can keep that. The comparison between 2026 and 2021 needs to be clear. Then, the buyback question should be included as a separate part.I should make sure to use the same terms but shorten the sentences. Maybe start with "What stage is the capital market cycle in..." instead of "What inning are we in for..." That's more direct. Then add the comparison part: "How do 2026 preconditions compare to 2021?" For the buyback part, "How should buybacks be approached with ample capital?" Putting it all together: "What stage is the capital market cycle in ahead? How do 2026 preconditions compare to 2021? How should buybacks be approached with ample capital?" Check if that's concise and captures both parts. Yes, each part is a separate question but combined into one. Also, the user specified to end with a question mark. The original had two questions, but the rewritten version should have three? Wait, no, the input has two main questions. Wait, the original input has two questions: the first one with two parts (inning and compare 2026 to 2021), and the second part about buybacks. So maybe the first part is two sub-questions. Let me check again.Original input: "What inning are we in for the capital market cycle ahead? Compare 2026 preconditions to 2021. Also, how should we think about buybacks given ample capital?" So the first part is two separate questions. The user wants to combine them into a concise question. So perhaps rephrase the first two parts as one question comparing the two years, and the buyback as another. But the user wants it all in one question. Wait, the user's example might have multiple questions. Let me look at the example output. The example input had two questions separated by a period and "Also," but the output is three questions. Wait, the user's instruction says to output "a rewritten question" which might be a single question, but the input has two. Maybe the user allows multiple questions as long as it's concise. The example given in the problem might have two questions. Let me check the input again.The input is two questions: the first is about the inning and the comparison, the second about buybacks. The user wants the rewritten version to include both. So perhaps combining the first two into one question and the second as another. But the user says "a concise question" which might imply a single question. Hmm. Maybe the user allows multiple questions if needed. Let me check the input again. The input has two parts separated by a period and "Also," so maybe the rewritten version should have two questions. Let me rephrase each part concisely.First part: "What inning are we in for the capital market cycle ahead? Compare 2026 preconditions to 2021." So the user is asking two things: current stage and comparison. Maybe combine them into one question: "What stage is the capital market cycle in ahead, and how do 2026 preconditions compare to 2021?" Then the second part: "How should buybacks be approached with ample capital?" But the user might prefer to keep them as separate questions. The original input has two questions. The user's instruction says "a concise question" but the example might have multiple. Let me check the example. The user's example input is a single question with two parts, and the output is three questions. Wait, no. The input is a single question with two parts, but separated by a period and "Also." The user wants to rewrite that into a concise question. So maybe combining into two questions. The original input is: "What inning are we in for the capital market cycle ahead? Compare 2026 preconditions to 2021. Also, how should we think about buybacks given ample capital?" So the first part is two questions ( - L. Erika Penala (UBS Investment Bank)

2025Q4: The cycle setup is constructive for M&A and capital markets in 2026, with potential to surpass 2021 levels. - David Solomon(CEO)

How do you see the capital markets cycle and 2026 outlook? - Glenn Schorr (Evercore ISI Institutional Equities)

2025Q3: The capital markets cycle is expected to follow a path similar to the last cycle, with the 2021 peak likely being the ceiling. - David Solomon(CEO)

Contradiction Point 2

Wealth Management Fee Inflow Target

Contradiction on the achievability of the long-term 5% annual fee-based net inflow target for wealth management, affecting investor confidence in strategic goals.

How do you plan to scale wealth, including targeting ultra-high net worth clients and RIAs, and what confidence do you have in raising and improving return floors? - Glenn Schorr (Evercore ISI Institutional Equities)

2025Q4: The target is 5% long-term fee-based net inflows annually in wealth management. - David Solomon(CEO)

What strategy will achieve the 5% long-term fee-based net inflow target in wealth management? - Ebrahim Poonawala (BofA Securities)

2025Q3: The 5% long-term annual fee-based net inflow target for wealth management is challenging and not a guarantee. - Denis Coleman(CFO)

Contradiction Point 3

Capital Deployment Priority

Contradiction on the primary use of freed-up capital between growth investment and returning capital to shareholders, a core strategic priority.

Where are we in the capital market cycle, how do 2026 preconditions compare to 2021, and how should buybacks be approached with ample capital? - L. Erika Penala (UBS Investment Bank)

2025Q4: Capital prioritization is first on client franchise investment, then buybacks. - Denis Coleman(CFO)

How will you utilize capital if regulatory reform occurs, and do you have organic opportunities to allocate large amounts of excess capital? - Glenn Schorr (Evercore ISI Institutional Equities)

2025Q2: The capital deployment strategy remains consistent: first, deploy capital to client franchises to produce accretive returns... second, continue to return capital to shareholders via dividends. - David Solomon(CEO) & Denis Coleman(CFO)

Contradiction Point 4

Capital Return Strategy and Dividend Outlook

Contradiction on the characterization of dividend growth rate sustainability, impacting long-term shareholder return expectations.

Considering regulatory changes and productivity focus, are returns rebasing to high teens, and is the current environment suitable for transformational M&A to shift business mix? - Ebrahim Poonawala (BofA Securities)

2025Q4: The bar for transformational M&A remains very high; the focus is on accelerating AWM growth through... small acquisitions like T. Rowe Price, Industry Ventures, and Innovator. - David Solomon(CEO)

What factors influenced the recent dividend increase's size, and what potential exists for future dividend growth? - Betsy Graseck (Morgan Stanley)

2025Q2: The recent 33% increase reflects confidence... Dividend growth will be steady, and there is room to drive it higher... not necessarily at the same 33% rate every year. - David Solomon(CEO)

Contradiction Point 5

Investment Banking Fee Outlook and 2026 Targets

Ambiguity and shift in what constitutes the 2026 fee target comparison, affecting clarity on performance benchmarks.

Does the 2026 investment banking fees reaching 2021 levels refer to all fees or only advisory fees? - Saul Martinez (HSBC Global Investment Research)

2025Q4: The reference was specifically to advisory volumes and fees, not the entire investment banking line. - David Solomon(CEO)

What is the reason for the $40 billion share buyback authorization, and how much capital could be freed by selling private investments and credit cards? - Michael Mayo (Wells Fargo Securities)

2025Q1: The $40 billion buyback program provides flexibility. Disposing of the historical principal investment (HPI) portfolio and the credit card portfolio could free up capital; attributed equity in HPI is approximately $4 billion, with a similar amount in the card portfolio. - David Solomon(CEO), Denis Coleman(CFO)