• Goldman Sachs (GS) CEO David Solomon calls the U.S. economy 'solid' even as a 'complicated operating environment' persists.
  • Third-quarter revenue rose 23% to $18.68 billion and net earnings jumped 29% to $5.29 billion, fueled by record merger-advisory fees and a 72% surge in equities trading.
  • But a shrinking investment-banking backlog and sluggish hiring data cloud the outlook, with the Fed's next move in focus.

Solid, But Not Simple

Goldman Sachs CEO David Solomon struck an optimistic tone on the U.S. economy Thursday, telling investors that conditions remain solid despite what he called a "complicated operating environment." The assessment came as the bank reported third-quarter results that beat expectations on the back of strong trading and advisory activity.

Goldman posted net revenue of $18.68 billion for the quarter ended September 30, up 23% from a year earlier, while net earnings rose 29% to $5.29 billion. Diluted earnings per share climbed 39% to $17.01, and annualized return on common equity was a healthy 18.7%, though that was down from 23.5% in the second quarter.

The headline numbers were powered by a 72% year-over-year surge in equities revenue, which hit $6.44 billion, as volatile markets tied to the Middle East conflict drove demand for hedging and financing. Investment-banking fees also impressed, rising 21% to $3.22 billion, with advisory revenue hitting a record $1.65 billion.

Cracks Beneath the Surface

Yet the picture is not uniformly bright. The investment-banking fee backlog decreased, primarily in advisory, suggesting that completed deals are running ahead of new mandates. Global M&A activity fell 41% from the prior quarter to $993 billion, according to LSEG (LSEG.L) data reported by Reuters (TRI). Fixed-income, currencies and commodities revenue was roughly flat year over year and down 24% sequentially.

Solomon flagged the divergence last month, noting that fixed-income trading was running softer than in previous quarters. The latest results bear that out.

The labor market offers another qualification. September payrolls increased by just 29,000, versus a revised 133,000 in August, while unemployment ticked up to 4.2%. That combination points to limited hiring momentum even as unemployment remains relatively low. Cleveland Fed President Beth Hammack said earlier this week that business contacts more often describe booming activity than retrenchment, though consumption appears disproportionately supported by higher-income households.

Fed Policy and Political Crosswinds

The Federal Reserve raised rates in September, and Hammack has said further restraint may be needed to bring inflation down. Investors currently expect rates to remain unchanged at the October 27–28 meeting, according to Reuters. For Goldman, a resilient economy is a double-edged sword: it supports earnings but reduces the case for easier monetary policy.

Goldman also cited tariffs, international trade-policy changes, regulatory approvals, and possible changes to U.S. bank-capital rules as risks to its forecasts. The bank’s international exposure is substantial, with roughly 26% of assets under supervision tied to Europe, the Middle East, Africa, and Asia combined.

Solomon’s comments came as Goldman continues to expand its asset-management business, announcing agreements during the quarter to acquire NEOS Investments and LCN Capital Partners. Management and other fees rose 22% year over year, and the firm recorded its 35th consecutive quarter of long-term fee-based net inflows. Still, the consumer-finance retrenchment remains consequential: the Apple (AAPL) Card loan portfolio was transferred to held-for-sale status in the fourth quarter of 2025, contributing to a 72% year-over-year decline in Platform Solutions revenue and a $76 million quarterly net loss for that segment.

The bank returned $4.49 billion to shareholders through buybacks and dividends during the quarter. Shares rose about 3.8% in premarket trading following the release, according to Reuters.

Goldman’s analyst call was scheduled to begin at 9:30 a.m. EDT, and further context may still be emerging. A spokesperson for the bank did not immediately respond to a request for comment on the backlog decline.

Correction: An earlier version of this article misstated the sequential change in fixed-income revenue. It fell 24% from the second quarter, not 24% year over year.