When Goldman Sachs reports earnings Thursday morning, Wall Street will be listening for more than just profit numbers. As the world's premier investment bank, Goldman's quarterly results serve as a barometer for global capital markets—a window into deal-making sentiment, trading activity, and institutional risk appetite that no other company can provide.

Analysts expect Goldman to report earnings per share of $11.62 on revenue of $14.49 billion for the fourth quarter of 2025. Those numbers, if achieved, would represent strong performance in a quarter marked by market volatility, geopolitical uncertainty, and ongoing questions about Federal Reserve policy. But the real story will be in the details—and in management's outlook for the year ahead.

The Investment Banking Question

Goldman Sachs lives and dies by investment banking fees. Unlike diversified competitors like JPMorgan or Bank of America, Goldman doesn't have a massive consumer banking operation to smooth out quarterly volatility. When M&A activity slows or IPO markets freeze, Goldman feels it acutely.

The good news: 2025 saw a meaningful recovery in deal-making after a brutal 2023 and tepid 2024. Private equity firms began putting their enormous cash piles to work. Strategic buyers returned to the acquisition table. The IPO window, while not fully open, cracked enough to let several notable companies go public.

Goldman's investment banking revenue will reveal whether that recovery accelerated into year-end or lost momentum. Analysts will parse the breakdown between advisory fees (M&A, restructuring) and underwriting revenue (equity and debt offerings) for clues about 2026 activity.

"The investment banking pipeline is the healthiest it's been in three years. The question is conversion—how much of that pipeline will turn into actual deals in 2026? Goldman's commentary will be essential for understanding sponsor sentiment and CEO confidence."

— Glenn Schorr, Managing Director, Evercore ISI

Trading: The Wild Card

Goldman's trading division has been a profit engine, benefiting from market volatility that many investors view as problematic. When markets swing wildly, Goldman's traders—among the most sophisticated on Wall Street—tend to profit.

Expectations for Q4 trading revenue are robust. Analysts project fixed income, currencies, and commodities (FICC) revenue of $5.29 billion and equities trading revenue of $2.55 billion, according to StreetAccount estimates. Those figures would represent strong year-over-year growth and underscore Goldman's trading prowess.

The sustainability of trading revenues is always questioned. Bulls argue that structural changes—electronic trading, derivatives complexity, institutional hedging demand—support permanently higher trading activity. Bears counter that trading revenue is inherently unpredictable and that any given quarter's results say little about the future.

Asset and Wealth Management: The New Growth Engine

CEO David Solomon has pushed Goldman to become a more significant player in asset and wealth management—businesses with recurring revenue streams that command higher valuation multiples than volatile trading and investment banking.

Progress has been meaningful. Goldman's asset management division now manages over $2.8 trillion, generating stable fee income that smooths quarterly results. The wealth management business has grown substantially, though it remains smaller than competitors like Morgan Stanley.

Thursday's results will reveal whether Goldman's diversification strategy is gaining traction. Fund flows—whether clients are adding or withdrawing money—will be closely watched. So will fee rates, which have been under pressure industry-wide as investors demand lower costs.

The Expense Elephant

One area of concern: expenses. Goldman management has signaled that costs could reach approximately $105 billion in 2026, above prior Street expectations. In an industry where compensation remains the largest expense category, rising costs could squeeze margins even if revenues hold up.

Wall Street will be looking for clarity on several expense-related questions:

  • Compensation ratios: What percentage of revenue is going to employee pay?
  • Technology spending: How much is Goldman investing in AI and automation?
  • Headcount: Is the bank adding or cutting employees?
  • Efficiency initiatives: What cost-saving programs are underway?

The Marcus Aftermath

Goldman's ill-fated consumer banking experiment, Marcus, remains a sore point. The initiative, which included the Apple Card partnership, accumulated billions in losses before Goldman pulled back. JPMorgan's recent acquisition of the Apple Card portfolio—for a reported $2.2 billion—effectively ended Goldman's retail banking ambitions.

The exit removes a drag on earnings but also raises questions about Goldman's strategic direction. Solomon bet that consumer banking could diversify the firm's revenue streams. That bet failed. What's the new strategy?

"The Marcus retreat was humbling but probably correct. Goldman's competitive advantages are in institutional businesses, not consumer banking. The question now is whether management can find other diversification opportunities that actually play to their strengths."

— Mike Mayo, Managing Director, Wells Fargo Securities

Reading the Fed Tea Leaves

Goldman's economists are among the most influential on Wall Street, and the firm's commentary on monetary policy will be closely parsed. With the Federal Reserve facing unprecedented political pressure—including the DOJ's criminal investigation of Chair Jerome Powell—the path of interest rates has become unusually uncertain.

Goldman's house view has been relatively hawkish, expecting only 50 basis points of Fed rate cuts in 2026. If that view changes based on recent developments, it could move markets. Similarly, any comments about how the Powell investigation might affect Fed independence and monetary policy will be scrutinized.

What to Watch Thursday

Beyond the headline numbers, several specific disclosures will merit attention:

  • Return on equity (ROE): Goldman targets 15-17% ROE. Achievement signals efficient capital deployment
  • Book value per share: The foundation of Goldman's intrinsic value calculation
  • Capital ratios: Excess capital above regulatory requirements suggests buyback capacity
  • 2026 guidance: Any quantitative or qualitative outlook for investment banking, trading, or expenses

The Bottom Line for Investors

Goldman Sachs stock has risen approximately 35% over the past year, outperforming the broader market and many banking peers. The rally reflects optimism about capital markets recovery and Goldman's competitive position in high-margin businesses.

Thursday's earnings will test that optimism. Strong results and constructive guidance could extend the rally. Disappointments—particularly in investment banking or concerning expense trends—could trigger profit-taking after a substantial run.

Either way, Goldman's report will tell us something important about the state of global finance and the prospects for a 2026 that promises to be anything but boring.