Goldman Sachs Posts Second-Best Revenue Quarter on Record Equity Financing, but Solomon Concedes No One Knows Whether AI Capital Demand Holds
Third-quarter earnings call, October 13, 2026
Goldman Sachs reported third-quarter net revenues of $18.7 billion, the second highest in its history, with EPS of $17.01, an ROE of 18.7% and an ROTE of 20.5%. The results absorbed an accelerated charitable contribution of about $450 million, which cost roughly $1 of EPS and 1.1 percentage points of ROE and ROTE. Excluding it, EPS would have been about $18, with ROE near 20% and ROTE near 21.5%. Year to date, revenues are a record, ROE is 20.7% and ROTE is 22.4%. The more important message from the call was that the firm is arguing for a structurally higher earnings base, while its CEO was unusually frank about how little anyone can see of the AI financing cycle that is feeding it.
Equity Financing Is Now the Engine, and Its Growth Is Slowing
Equities net revenues were $6.4 billion, up 72% year over year. Equities financing revenues rose 96% to a record, driven by elevated average prime balances and strong activity in Asia. Intermediation revenues rose 52%, led by derivatives. Total financing revenues across FICC and Equities reached a record $12.7 billion year to date, over 40% of combined revenues. CFO Denis Coleman said demand for equity financing "continues to exceed available industry capacity, supporting attractive pricing," which lets the firm stay selective.
The momentum is flattening, though. Responding to a question from BMO's Brennan Hawken about de-grossing in the quarter, Coleman said sequential growth in financing was only about 3%. "I think there was deleveraging in the quarter. I think there was some disruption over the course of the quarter. And so the trajectory did not sustain," he said, while calling the level "still very healthy." Coleman also signaled that the largest balance sheet expansion is behind the firm. On the supplementary leverage ratio, he said Goldman is "migrating to a zone where we run a buffer in SLR, much like we run in CET1," and he does not expect significant movement from here. Investors extrapolating the first-half pace of financing growth should take note.
Evercore ISI's Glenn Schorr and Bank of America's Ebrahim Poonawala both pressed on durability. Solomon conceded that the prime business will move with equity markets and that "when equity markets come down, there's a deleveraging." His argument is about horizon: over 3 to 5 years the business tracks GDP and market capitalization growth. He was also notably restrained about the top line. Revenues have compounded at 11% since 2022, and "I do not believe we're going to grow our revenues by 11% compounded on the top line for the next 5 years." Durable revenues have more than doubled since the 2020 Investor Day and now account for roughly 45% of year-to-date revenues.
AI Infrastructure: A Central Position and an Open Admission of Uncertainty
Solomon cited studies estimating that U.S. data center build-out could require more than $10 trillion of investment through 2032, averaging roughly 3.6% of U.S. GDP annually, and said client demand for compute significantly exceeds supply. He positioned Goldman as uniquely placed, saying it is "the only firm that sits at the epicenter" of advising on projects, originating and structuring financings, distributing them, and coordinating public and private pools of capital through its asset management arm.
He was less promotional when asked directly whether financing is the choke point, a concern raised by Broadcom's Hock Tan. "I'm probably going to disappoint you on my answer, which is I don't know and nobody knows," Solomon said. He acknowledged a risk of crowding out, that rising financing needs could pressure rates and the viability of certain projects, and that "there will be a point in time when this recalibrates, resets, for sure. And when that does happen, of course, there will be some bumps." He also noted that financing economics differ sharply depending on the offtaker, with a large gap between projects serving hyperscalers and those serving neo-clouds. Coleman added that this cycle differs from prior ones because the largest companies driving it can fund much of it from free cash flow, so Goldman's role extends from advising those companies on debt, equity and ratings to distributing paper and putting certain structures on its own balance sheet.
Investment Banking: Record Advisory, Backlog Still Full, Sponsors Absent
Advisory revenues of $1.7 billion set a quarterly record, up 18%. Equity underwriting rose 43% to $666 million and debt underwriting rose 15% to $904 million. Goldman advised on $1.5 trillion of announced M&A year to date, holding a lead of about $430 billion over its closest peer, the largest it has had. Named deals included Hugging Face's $13 billion sale to NVIDIA and Integer Holdings' $6 billion sale to KKR. The backlog, at a five-year high entering the quarter, remains "very robust" as advisory realizations were largely offset by equity underwriting replenishment.
Solomon was willing to concede some deterioration. A move of roughly 75 basis points in the 10-year since July, and a handful of pulled IPOs, mean conditions are less ideal than earlier in the year. He described the environment as "top decile" in May and June and "top quartile" now. The pulled IPOs, he said, reflected valuation expectations set in May and June that met softer pricing in September: "if you expected a valuation and you got something 10% to 15% less, you might choose not to go forward." He argued that a 5% 10-year Treasury "doesn't scare me," given his 64 years of perspective, and that abrupt moves, not levels, are what hurt markets.
Sponsor activity remains the missing piece. Sponsor share of announced M&A is below historical averages, and Solomon said the constraint is less about rates than about marks. Much 2020 and 2021 vintage paper is "still marked higher than where it can be monetized," and sponsors are using continuation funds to wait. He called the eventual release a tailwind but acknowledged it "has been slower than we would have expected." On the midterms, he does not see clients on the sidelines, describing an administration in which "whatever the question is, the answer is very significant maybe," and a regulatory window that lasts 2.5 more years. On a divided-government outcome, he declined to forecast.
Asset and Wealth Management: Fundraising Target Raised Again
Asset and Wealth Management revenues were $5.1 billion, up 14%. Management and other fees rose 22% to a record $3.6 billion. Assets under supervision reached $4.1 trillion after $97 billion of long-term net inflows, the 35th consecutive quarter of inflows. Wealth Management added $47 billion, annualizing at 12% against a 5% target, and Coleman said nothing one-time drove the figure. Alternative assets under supervision rose 26% to $491 billion, and fundraising was $37 billion in the quarter and $122 billion year to date. Full-year fundraising is now expected at roughly $150 billion, well above the $75 billion to $100 billion range set at the start of the year.
Citizens' Devin Ryan asked whether this was opportunistic. Solomon rejected the idea, calling it a strategy started 6-plus years ago, though he noted institutional allocators have found private credit more attractive in the last 3 to 6 months as spreads have normalized despite "noise in the media." Incentive fees of $587 million were boosted by a portfolio company IPO accessed through the ultra-high-net-worth franchise and are expected to stay elevated in the fourth quarter. Investment revenues were weak at $50 million on monetization timing and markdowns. The pending acquisitions of NEOS, with about $35 billion of AUS in derivative income ETFs, and LCM Capital Partners, a triple net lease manager, would lift active ETF AUS above $90 billion. Solomon said gaps remain in the platform and further deals are possible, with "a very high bar around culture fit."
Credit, Costs and Capital
The provision for credit losses was $368 million, reflecting loan growth, with the loan book up 6% sequentially to $276 billion, and elevated impairments on a couple of names. Coleman called these "highly idiosyncratic, a noncorrelated set of names" and said he does not see them as a signal of more to come. That reading will be tested if the AI-linked and sponsor-related parts of the book come under strain.
Operating expenses were $11.3 billion in the quarter. Non-compensation expenses of $6.2 billion rose 30%, mostly on transaction-based costs tied to equities and Asia, and Coleman expects those to keep growing with activity. The charitable acceleration pulls forward at least 5 years of planned giving, with another meaningful contribution coming in the fourth quarter. The year-to-date efficiency ratio of 59.4% improved by 270 basis points, and the compensation ratio net of provisions is 30%. Coleman attributed this partly to financing-heavy growth that uses balance sheet and risk appetite rather than headcount, while stressing that competition for top talent is intense.
The CET1 ratio was 12.4%, 100 basis points above the 11.4% requirement and at the top of the 50 to 100 basis point buffer Solomon cited. Goldman repurchased $3 billion of stock and paid $1.5 billion in dividends. KBW's Chris McGratty and others noted the firm is buying back stock at roughly 3x tangible book while balance sheet demand is strong. Coleman said the approach is unchanged: deploy into the client franchise first, grow the dividend, now $5 a share versus $4 a year ago, and return the excess. Management welcomed the Fed's CCAR finalization and expects Basel III endgame and G-SIB finalization by year-end.
Succession Denied, Digital Assets Framed as Small
Solomon addressed recent press reports of a leadership transition directly, in response to questions from both Schorr and Wells Fargo's Mike Mayo. "There is no succession transition or timeline underway at Goldman Sachs," he said.
On tokenization, agentic trading and prediction markets, Solomon argued that they expand the addressable market, comparing them to the electronification of equities, which had been feared and ultimately proved a larger opportunity. He cited Goldman's tokenized bonds and money market funds, its participation in the July launch of DTCC's tokenization service, and its own digital asset rails. He was candid that the activity is "very small at this point" and "at the margin," and that Goldman is monitoring it for risk as well as opportunity.