Wall Street had a bit of a minor heart attack on Thursday morning. If you just glanced at the headlines, you might’ve thought Goldman Sachs was in trouble. Total revenue for the fourth quarter hit $13.45 billion, which actually missed what the analysts were looking for. Usually, a miss like that sends a stock into a tailspin.
But then something weird happened. The stock didn't crater. It actually popped.
Honestly, it’s because the "miss" was a total accounting mirage. While the top-line revenue looked a little light, the Goldman Sachs earnings report revealed a massive beat on the bottom line. We’re talking about earnings per share (EPS) of $14.01, absolutely crushing the consensus estimate of $11.65.
If you want to understand what's really going on with the world's most powerful investment bank, you have to look past the Apple Card drama and see the "Dealmaking Renaissance" that David Solomon is betting his career on.
The Apple Card Exit: A $2 Billion Accounting Headache
Basically, the reason the revenue looked wonky is that Goldman is finally breaking up with Apple. They’re handing the Apple Card portfolio over to JPMorgan Chase, and that move required some serious financial gymnastics.
📖 Related: Average Uber Driver Income: What People Get Wrong About the Numbers
The bank took a $2.26 billion markdown on that portfolio, which dragged down the reported revenue. But—and this is the part the market loved—they also released $2.48 billion in credit reserves they’d been holding against those loans. Since they don't own the risk anymore, they don't need the rainy-day fund.
The net result? A massive boost to the actual profit that landed in shareholders' pockets. It's like finding a $20 bill in your winter coat, except the coat is a multi-billion dollar credit card business and the $20 bill has eight extra zeros.
Why the "Dealmaking Renaissance" is Real
You've probably heard for two years that the M&A market was "frozen." Higher interest rates and regulatory jitters kept CEOs on the sidelines. Well, according to this Goldman Sachs earnings report, the ice hasn't just cracked—it's melted.
Investment banking fees jumped 25% year-over-year to $2.58 billion. That’s huge. Even more telling is the advisory backlog, which Solomon noted is at its highest level in four years. When Goldman says their backlog is full, it means corporate America is getting ready to spend money again.
👉 See also: Why People Search How to Leave the Union NYT and What Happens Next
Breaking down the segments:
- Global Banking & Markets: This is the heart of the beast. It pulled in $10.4 billion for the quarter, up 22% from last year.
- Equities: A record year. They cleared $16.5 billion in 2025, proving that despite all the talk of "fragmentation," the big players still want to trade with Goldman.
- Asset & Wealth Management: This is the "durable" side of the business they've been trying to grow. Management fees hit a record $3.1 billion this quarter.
The firm is shifting. They’re moving away from the "cowboy" days of using their own balance sheet to make wild bets (Principal Investments are down 90% from their peak) and moving toward being a fee-collecting machine. It’s less exciting for a movie script, but it’s way better for the stock price.
Prediction Markets: The New Frontier?
One of the most surprising things to come out of the earnings call wasn't a number at all. It was David Solomon’s tone regarding prediction markets.
He didn't just mention them; he basically signaled that Goldman wants to institutionalize them. He’s been meeting with the heads of platforms like Kalshi and Polymarket. In Solomon’s view, these aren't "betting sites"—they’re "event contract activities."
"We continue to see high levels of client engagement... activating a flywheel of activity across our entire firm." — David Solomon, CEO
✨ Don't miss: TT Ltd Stock Price Explained: What Most Investors Get Wrong About This Textile Pivot
If Goldman starts offering institutional-grade derivatives based on election outcomes or economic data, it changes the game. It turns a niche retail trend into a legitimate asset class.
The 2026 Outlook: What You Should Actually Do
The bank is projecting a 15% Return on Equity (ROE) for the full year 2026. For a bank this size, that’s a "pedal to the metal" forecast. They also hiked the quarterly dividend by 50% to $4.50 per share.
So, how do you play this?
- Watch the IPO Pipeline: Goldman’s backlog is the "canary in the coal mine." If you see a flurry of tech IPOs in Q1, it confirms that the "Renaissance" Solomon talked about is in full swing.
- Monitor the Fed Divergence: Goldman is betting on a "constructive setup" for 2026, assuming the Fed continues a modest easing cycle. If inflation spikes back up, this whole thesis of a dealmaking surge could stall.
- Focus on Durable Revenue: If you're an investor, stop looking at the trading swings. Look at the Asset & Wealth Management margins. They just raised their target to 30%. If they hit that, the stock likely gets a higher valuation multiple because it's no longer just a "volatile" investment bank.
Goldman Sachs isn't just a bank; it's a barometer. Right now, the barometer is pointing toward a very busy, very profitable 2026 for anyone involved in the capital markets. The Apple Card mess is finally in the rearview mirror, and the "core Wall Street engine" is humming at a level we haven't seen since the pre-inflationary boom.
Keep an eye on the 14.4% CET1 ratio. It means they have plenty of "dry powder" to either buy back shares or fund the massive M&A wave they see coming. The "long winter" is over.
Next Steps for Investors:
Review your exposure to the "bulge bracket" banking sector. With M&A fees rising and the Apple Card distraction gone, Goldman is positioned as a pure-play bet on the return of corporate animal spirits. Check the 13F filings in February to see which institutional whales followed Solomon into this "Renaissance."