Goldman Sachs Q1 Preview: All Eyes on Investment Banking and Markets After MS Sets the Bar

Goldman Sachs is set to report first-quarter earnings on Monday morning, and expectations are tinged with both optimism and caution. While rival Morgan Stanley just posted record revenues—raising the bar for Goldman—recent sector-wide downgrades and weak results from Jefferies have tempered expectations for the investment banking giant.

FactSet consensus estimates call for EPS of $12.32 and revenue of $14.77 billion. Investors will be laser-focused on how Goldman performs in its core Global Banking and Markets division, which accounts for over 60% of its total revenues, particularly in a quarter where deal activity remained muted and market volatility delivered mixed trading conditions. CEO David Solomon has struck a cautiously constructive tone, forecasting a pickup in IPO and M&A activity as 2025 unfolds, but emphasized that policy uncertainty continues to keep many transactions on the sidelines for now.

One of the most important areas to watch will be investment banking revenue, especially after Jefferies reported a 39% drop in equity underwriting and cited a still-fragile dealmaking environment. Goldman’s advisory pipeline may provide some cushion, but its dependence on capital markets makes it vulnerable to macro volatility.

Morgan Stanley downgraded GS to Equal Weight, citing its high sensitivity to recession risk and forecasting a 12% ROE for 2025—below Goldman’s medium-term target of 14–16%. They flagged potential weakness in the Apple Card portfolio, with 36% of cardholders having sub-660 FICO scores, making it susceptible to consumer credit deterioration.

Keefe Bruyette also downgraded the stock, citing valuation risk and policy headwinds, including tariffs and inflation. Still, Wells Fargo remains bullish, raising its price target to $720 and projecting margin improvement across all segments. Solomon himself reiterated that Goldman’s markets business “will only get bigger” and hinted at a constructive long-term backdrop despite short-term turbulence.

The bank’s performance Monday will offer critical insight not just into Goldman’s positioning—but into the health of Wall Street's broader ecosystem.

Q4 Recap- Finishing 2024 on a High Note

Goldman Sachs concluded 2024 on a high note, reporting fourth-quarter net revenues of $13.87 billion and net earnings of $4.11 billion—more than double the previous year's figures. This performance was driven by a 33% year-over-year increase in Global Banking and Markets revenue, with equities trading revenues up 32% and fixed income trading revenues rising 35%. Investment banking fees also grew by 24%, bolstered by a resurgence in equity and debt underwriting activity. The bank's return on equity reached 14.6% for the quarter, contributing to an annual ROE of 12.7%.

Looking ahead, key areas to monitor include the performance of the Wealth Management division, which reported a 16% year-over-year increase in net revenues, reaching $16.14 billion for 2024. Assets under supervision hit a record $3.14 trillion, marking the 28th consecutive quarter of long-term fee-based net inflows.

Additionally, the Platform Solutions segment, encompassing consumer platforms and transaction banking, saw a 16% increase in net revenues year-over-year. However, this segment also reported a net loss of $197 million for the quarter, primarily due to credit card portfolio provisions citeturn0search3. As Goldman Sachs continues to navigate these dynamics, the firm's strategic focus on integrating its services and enhancing operational efficiency will be pivotal in sustaining its growth trajectory.