Delta Air Lines might have unofficially kicked off the Q1 earnings season last week, but all things considered, it doesn’t really get started until the financials start trickling in. Stepping up to the plate first, Goldman Sachs.
The investment bank hauled in $17.23 billion in revenue, up 14% year over year. Earnings per share came in at $17.55, up 24% year-over-year. Both bested analyst expectations, with record showings in the bank’s Equities and Investment Banking businesses playing a big role in the beat. They grew 27% and 48% year over year to $5.33 billion and $2.84 billion, respectively.
However, despite that strength, investors found a bone to pick. They generally do. Two big factors derailed the otherwise positive results, including an unexpectedly negative showing from a business that investors have come to see as reliable.
No icing on the cake
While results from Equities and Investment Banking were well-received, they tend to vary from quarter to quarter. When the market is strong and dealmaking is robust, these revenues tend to perform well. But investors were banking on the more consistent Fixed Income, Currency, and Commodities (FICC) division to deliver.
Instead, its revenues came up $800 million short of the consensus and overshadowed the otherwise positive quarter. Revenues in FICC were down 10% year over year, disappointing investors who had come to assume its reliability. Despite that, it was the “10th-best” quarter for the business.
Net interest income in the quarter also disappointed, falling short of analyst expectations and declining quarter over quarter.
Business performance wasn’t the only problem, though. Amid ongoing worries about “AI-driven disruption” and the ongoing conflict in the Middle East, CEO David Solomon and management also offered cautious commentary. Arguably, even bigger than the TICC miss was a $315 million warning in the company’s results.
The $315 million problem
Arguably, one of the biggest factors playing on Goldman Sachs’ stock today is a rise in credit provisions. Goldman has been no stranger to high credit provisions for losses in recent quarters, due in large part to its ailing consumer banking business. But this quarter was different.
Goldman’s failed foray into consumer banking failures has caused it to jump ship from its Main Street push, divesting credit products, selling loan portfolios in a fire sale, and ultimately selling its portfolio crown jewel: the Apple Card. Last quarter, Goldman recorded a $2.12 billion benefit after it moved its Apple Card portfolio to “held for sale” after the firm found a willing buyer in JPMorgan Chase.
However, absent the consumer business, credit provisions came back in the first quarter of 2026. This time, it had to do with losses on loans to businesses — think wholesale lending to private equity or private credit firms, debt trouble with commercial real estate (CRE), and other commercial lending.
The bank swung from its $2.1 billion benefit to a $315 million expense, which was nearly double the size expected by analysts.
The three buckets
The company credits “growth and impairments related to wholesale loans” as the reason for the steeper expense. Provisions fell into three categories.
The most worrying among them are so-called “single-name” impairments, where individual borrowers were facing default. These are not unusual, but at this size, they imply that corporations are finally buckling after years of higher interest rates.
Arguably the least troubling bucket was “growth in financing.” When Goldman Sachs offers credit to a business, it has to put aside funds for potential losses under accounting rules. This could actually be seen as a good thing, since it implies that there is an appetite for borrowing among businesses, despite the current environment.
However, the commentary also includes a foreboding about the current macroeconomic environment. After tweaking their models, the bank assumed greater odds of default amid the Middle East conflict. Greater uncertainty in private credit was also a factor.
What about private credit?
Since the start of the year, there has been mounting worry about private credit, as large funds have seized up amid an influx of withdrawals. As a result, many private credit funds have restricted withdrawals, escalating worries further.
Goldman has remained fairly bullish on the private credit theme despite the withdrawals, aiming to grow toward a “$300 billion private credit target.” However, given worries about the business of shadow banking, Goldman will likely end up positioning for higher levels of loss than from traditional lending.
What else did Goldman Sachs have to say?
Aside from the disappointment from TICC and the $315 million expense, CEO David Solomon had even more to say about dealmaking, AI, and M&A.
Iran War threatens dealmaking
Solomon did warn that a prolonged Iran War could derail the dealmaking comeback. The market has recovered greatly from the worst of the conflict, but although large investment managers like BlackRock portend the “end” of the conflict, there’s truly no clear off-ramp for the conflict.
AI could be overstated
On a more neutral note, Solomon warned of a “recalibration” in the market, namely among technology names that have been hammered by fears that AI could crowd out incumbents. The bank’s chief executive struck a more moderate tone, saying that it might be “harder and slower” to deploy the avant-garde technology in large enterprises. That seems to be supported by data showing stagnation in enterprise AI adoption and growing resistance to the technology.
M&A is so back
Solomon did carve out time to talk about a big positive, though: M&A seems to be back on, amid a more “hands-off” approach at the Department of Justice (DoJ) and Securities and Exchange Commission (SEC). This year was already anticipated to be a blockbuster year for mega IPOs, but Solomon says that “mega deals” could also be on the docket.