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Goldman Sachs crushed expectations with its fourth-quarter earnings results.
Strong results were driven by robust investment banking activity, which CEO David Solomon expects to accelerate in 2026.
Goldman Sachs is transitioning its Apple Card program and $20 billion in balances to JPMorgan Chase, continuing its pivot away from consumer banking.
Goldman Sachs (NYSE: GS) delivered strong results when it announced its fourth-quarter earnings results last week. The bank saw profits rise as its core business benefited from recovering capital markets activity and robust trading profits. As investment banking continues to rebound, Goldman Sachs' stock has surged 51% over the past year. The company has potential for further tailwinds that could push it even higher.
Here are three key things investors need to know about Goldman Sachs heading into 2026.
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Goldman Sachs reported a big earnings beat in the fourth, delivering earnings per share (EPS) of $14.01 versus analysts' expectations of $11.65. The surge was driven by robust investment banking activity, fueled by a resurgence in mergers and acquisitions (M&A) and initial public offerings (IPOs). During the fourth quarter, investment banking fees grew 25% year over year to $2.58 billion.
CEO David Solomon expects investment banking activity to "accelerate in 2026" and said he believes that the backdrop provides the company with a "highly constructive setup" for the year. The company's investment banking backlog is at its highest level in four years. This, coupled with a friendlier regulatory environment and a massive amount of dry powder in private equity, could help drive further growth.
In the first quarter, Goldman Sachs announced that it had reached an agreement to transition the Apple Card program and its $20 billion in balances to JPMorgan Chase. According to The Wall Street Journal, Goldman is offloading the balances at a $1 billion discount. The process will take approximately 24 months and is part of Goldman's strategic pivot away from consumer banking.
The move comes as Goldman narrows its focus to its consumer business and redirects resources toward asset and wealth management, which offer more durable revenue, better profitability, and a lower risk profile.
Artificial intelligence (AI) is touching every aspect of our lives, and its applications are being used wherever companies can gain an advantage and become more efficient. Companies need to be wise with their adoption, including traditionally slower-moving banks. Solomon introduced "One Goldman Sachs 3.0," an operating model powered by AI to drive productivity and efficiency.
Goldman is looking at specific processes, and management has identified six work streams ripe for disruption and reengineering using AI. By leveraging AI, the investment bank aims to better allocate capital to high-growth areas of the business, including asset and wealth management.
Goldman Sachs has soared, and the company is in a solid position to benefit from tailwinds from strong investment banking activity, including several large initial public offerings on the horizon in 2026. The stock trades at 14.9 times earnings, and I think it has more room for upside from here.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in JPMorgan Chase. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.
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