Goldman Sachs Kicks Off Earnings Season With a Blowout Quarter, Yet Investors Are Selling the Stock Anyway. Here are 2 Reasons Why

The large and historic investment bank Goldman Sachs (NYSE: GS) kicked off the 2026 first-quarter earnings season with blowout results, easily topping Wall Street analyst estimates.

The bank generated earnings per share of $17.55, over $1 better than estimates coming into the quarter. Revenue of $17.23 billion topped expectations by $260 million.

Yet, as of 11:27 a.m. ET today, the stock was down roughly 3.6% and had been down nearly 5% earlier this morning. Here are two reasons the strong results weren't enough to win over investors.

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Two misses

The main issue was that Goldman's fixed-income trading revenues came up well short of Wall Street expectations. The bank reported about $4 billion in fixed-income revenue, which was $900 million below Wall Street estimates. Goldman attributed the miss to weakness in interest rate products, mortgage, and credit.

Bank trading desks typically perform well during intense market volatility, such as that experienced in the first quarter of the year, because they earn higher fees as investors reposition their portfolios more often. The market expected a big quarter out of both equities and fixed income trading, but Goldman came up short in fixed income.

However, equities trading revenue came in at $5.33 billion, roughly $420 million above Wall Street's expectations and a record.

The other issue in Goldman's results was the provision for credit losses. Goldman recorded a provision of $315 million, more than double Wall Street's estimate of $150 million. Furthermore, Goldman attributed the larger provision to loan growth and expected write-downs in wholesale loans.

While it's unclear exactly which wholesale loans are impacted, that could further stoke concerns about private credit, which the market is already on edge about. In its 10-K, Goldman's largest category of wholesale loans is loans backed by specific collateral, including investment funds that are collateralized by commitments from the fund's investors or clients who warehouse assets.

Ultimately, long-term investors don't need to read too much into the miss in fixed income or the higher provision. Fixed income revenues still climbed by about $900 million from the prior quarter, and the provision was up about 10% year over year, which isn't too big of a deal. The credit provision is also very difficult to forecast.

While Goldman's stock isn't exactly cheap right now, the company has a solid backdrop that could improve further if interest rates fall. Investors can continue to hold the stock long term.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.