Goldman Sachs Q1 Earnings Preview: Strong Fundamentals Meet 'Wall of Worry'

T rad ing K e y - Ap r i l 1 3 , 2 0 2 6 , G o l d m a n S a c h s ( GS) w i l l l e a d t h e w a y , g r a d u a l l y k i c k i n g o f f t h e f i r s t - q u a r t e r e a r n i n g s s e a s o n f o r m a j o r W a l l S t r e e t b a n k s . U n d e r t h e d u a l i n f l u e n c e o f t h e p e s s i m i s t i c " A I d i s r u p t s e v e r y t h i n g " n a r r a t i v e a n d s i m m e r i n g p r i v a t e c r e d i t r i s k s , t h i s r e p o r t c a r d i s n o t o n l y c r i t i c a l f o r G o l d m a n ' s o w n v a l u a t i o n b u t i s a l s o s e e n b y t h e m a r k e t a s a v i t a l b e l l w e t h e r f o r w h e t h e r t h e e n t i r e f i n a n c i a l s e c t o r c a n c l i m b t h e " w a l l o f w o r r y . "

I. Wall Street Expectations: Broad Recovery Driven by Trading and Investment Banking

According to data from LSEG, the analyst consensus expects Goldman Sachs to report first-quarter earnings per share of $16.49 on revenue of approximately $16.97 billion, representing year-over-year growth of roughly 17% and 13%, respectively.

By business segment, the trading division is the standout highlight of this earnings report:

• Fixed Income: Expected revenue of $4.92 billion, up approximately 12% year-over-year.
• Equities Trading: Expected revenue of $4.91 billion, up approximately 17% year-over-year.

Market volatility was significant in the first quarter as institutional investors frequently rebalanced portfolios amid AI-driven sector rotations, driving substantial order flow for Goldman Sachs' trading desks. Investment banking is also gradually recovering, with industry-wide IB revenue projected to grow by 10% in the first quarter. As a top-tier player in M&A and ECM, Goldman's investment banking fees are poised to reach $2.5 billion, a year-over-year increase of over 30%. In fact, Goldman management signaled in the fourth quarter of last year that they were optimistic about M&A and capital market activity through 2026.

II. Macro Risks: How Do "Geopolitical Conflict" and the "AI Impact Chain" Impact Goldman Sachs?

However, fundamental data is not the market's sole focus.

1. Geopolitical Conflict: The Double-Edged Sword of the Iran War

The Iran conflict, which broke out on February 28, has continuously driven up crude oil prices since the end of the first quarter of 2026. Following the breakdown of U.S.-Iran negotiations on April 13, Brent crude rose above $102 at one point. While significant geopolitical disturbances have generated incremental revenue for trading operations, they may also lead corporate clients to adopt a wait-and-see approach toward M&A activity, thereby delaying the execution pace of investment banking projects. Goldman Sachs management's interpretation of how the Iran war affects trading and M&A will be a key window for the market to determine whether volatility is a revenue catalyst or a capital expenditure inhibitor.

2. The 'AI Disruption' Impact Chain

What worries the market even more is the impact of the 'AI disrupts everything' narrative on the financial sector. Goldman Sachs' own data shows that global hedge funds sold off the financial sector in mid-March, making it the most net-sold sector of the year.

The market fears not just a collapse in software stock valuations, but the entire chain: shrinking software company valuations — rising default risks in private credit — and the subsequent damage to the credit exposure of financial institutions.

III. Private Credit Risks

For Goldman Sachs itself, the impact of private credit risk is the most direct.

According to a filing, the $15.7 billion Goldman Sachs Private Credit Corp. received redemption requests equivalent to 4.999% of its outstanding shares in the first quarter, barely remaining under the industry's 5% cap and up from 3.5% in the fourth quarter of last year. Currently, over $8 billion is "trapped" in various private credit products with redemption restrictions.

In its letter to shareholders, the Goldman Sachs fund highlighted its strengths: a predominantly institutional investor base, diversified funding sources, a longer-term horizon, and more flexible operations, which helped it avoid the direct impact of large-scale retail withdrawals.

In addition, risks surrounding a so-called "SaaSpocalypse" are mounting—more than $330 billion in software and technology-related debt is set to reach concentrated maturity by 2028, while the disruption of SaaS business models by AI is simultaneously intensifying market concerns over credit quality.

IV. Earnings Call: Three Key Highlights

Goldman Sachs is scheduled to report earnings before the U.S. market opens on Monday, followed by an analyst conference call at 9:30 AM. The following three key watchpoints will determine the market's final reaction:

1. Management's characterization of geopolitical conflicts

Will the commodity volatility and interest rate uncertainty stemming from the conflict in Iran prove to be a "short-term windfall" for trading operations or a "structural brake" on corporate financing? The rhetoric from CFO Denis Coleman will shape market expectations for full-year performance.

2. Stance on AI impact and private credit risks

Will management acknowledge a material impact from AI on private credit exposures, or will they characterize it as "sentiment-driven overshoot"? JPMorgan CEO Jamie Dimon warned earlier this month that loan losses in private credit for highly leveraged firms could exceed expectations. Goldman's perspective will be pivotal for how the market reprices credit risk across the financial sector.

3. Investment banking pipeline and M&A outlook

David Dubner, Global COO of M&A at Goldman Sachs, previously forecasted that M&A activity would remain robust through 2026, with the IPO window also reopening. Following a nearly 95% surge in the share price over the past year, investors are primarily focused on whether management can provide growth guidance sufficient to justify current valuations.

V. Conclusion

Goldman Sachs' first-quarter earnings report represents a head-on collision between robust fundamentals and macro tail risks.

• Bullish support: The accelerating recovery in investment banking and double-digit growth in trading operations have established a solid foundation for performance.
• Risk factors: Geopolitical uncertainty, the impact of AI on credit quality in the software sector, and liquidity pressures from a wave of private credit redemptions constitute a "Sword of Damocles" hanging over the financial sector.

If Goldman Sachs management can address market skepticism with robust performance data and optimistic forward guidance, this earnings report will be more than just a "strong showing"; it could help stabilize sentiment across the broader financial sector. Conversely, if management signals caution regarding credit quality and the loan outlook, it will be difficult to argue that the financial sector's current downturn was merely an emotional overreaction. Which way will the scales tip between bulls and bears? The answer will be revealed pre-market on April 13.