Goldman Sachs Profits Rise on Stock Trading, M&A Surge: The $17.55 Quarter That Defied the Iran War

 

 Goldman Sachs Profits Rise on Stock Trading, M&A Surge: The $17.55 Quarter That Defied the Iran War

## The 19% Profit Jump That Caught Wall Street Off Guard

At 7:00 a.m. Eastern Time on April 13, 2026, Goldman Sachs released a set of numbers that seemed almost impossible given the global backdrop. The Wall Street giant reported net earnings of **$5.63 billion** for the first quarter—a **19% increase** from the same period last year . Diluted earnings per share came in at **$17.55**, comfortably beating analyst expectations of $16.34 .

Total net revenue surged **14% to $17.23 billion**, marking the firm's second-highest quarterly total on record . The annualized return on common shareholders' equity hit **19.8%**, a level that would have seemed aspirational just months ago .

These numbers were delivered against a backdrop of geopolitical chaos. The Iran war, which erupted on February 28, had effectively closed the Strait of Hormuz, sent oil prices soaring past $100 per barrel, and triggered the largest supply disruption in history. Yet Goldman Sachs—the firm that nearly collapsed during the 2008 financial crisis—was thriving.

The engine of this growth was unmistakable. Goldman's **equities trading division** generated **$5.33 billion** in revenue, a **27% increase** from a year ago and a new Wall Street record . The firm's **investment banking fees** jumped **48% to $2.84 billion**, driven by an **89% surge in M&A advisory revenue** . Dealmaking fees alone hit $1.5 billion, reflecting a sharp rebound in corporate transactions .

But the market's reaction was paradoxical. Goldman's stock fell more than 4% in pre-market trading following the announcement . Investors were focused on the weakness in the fixed income division, where FICC revenue dropped 10% to $4.01 billion . They were also scrutinizing the firm's rising credit loss provisions and the unsustainable boost from a one-time tax benefit.

This 5,000-word guide is the definitive analysis of Goldman Sachs' first-quarter earnings. We'll break down the record equities trading performance, the M&A rebound, the FICC weakness, the tax benefit asterisk, and what this all means for investors navigating the 2026 war economy.

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## Part 1: The $17.55 Beat – Breaking Down the Numbers

### The Headline Results

Goldman Sachs' first-quarter performance was, by any measure, exceptional. The $17.55 EPS significantly exceeded the $16.34 that analysts had forecast . Net revenue of $17.23 billion topped expectations of $16.95 billion . Pre-tax profit rose 15% to $6.49 billion .

| **Financial Metric** | **Q1 2026** | **Q1 2025** | **Change** |

| :--- | :--- | :--- | :--- |

| Net Revenue | $17.23B | $15.11B | **+14%** |

| Net Earnings | $5.63B | $4.73B | **+19%** |

| Diluted EPS | $17.55 | $14.12 | **+24%** |

| Annualized ROE | 19.8% | 14.8% | **+5.0pp** |

| Book Value Per Share | $361.19 | — | **+1%** (sequential) |

*Source: Goldman Sachs earnings release *

The quarter marked a stunning reversal from the anxiety that had gripped markets just weeks earlier. When the Iran war erupted in late February, many analysts had expected trading revenues to suffer as clients froze. Instead, the opposite occurred.

### The Tax Benefit Asterisk

However, there is an important asterisk attached to these numbers. The effective tax rate for the quarter was just **13.2%** , down sharply from the full-year rate of 21.4% in 2025 . This reduction was primarily driven by approximately **$895 million in tax benefits** related to the settlement of employee share-based awards .

If you exclude that one-time benefit, the "adjusted" EPS would fall from $17.55 to approximately **$14.64** . This means that the underlying performance improvement—while still strong—was amplified by a tax windfall that is unlikely to repeat.

"Taxes are fungible," one analyst noted. "The headline $17.55 is real, but investors need to understand that $2.91 of it came from a non-operating benefit."

---

## Part 2: The Equities Record – A $5.33 Billion Masterclass in Volatility

### The Second Consecutive Record

Goldman Sachs' equities trading division has now made history **two quarters in a row**. The $5.33 billion in revenue surpassed the previous record of $4.31 billion set in the fourth quarter of 2025 by more than $1 billion . It was, by a wide margin, the highest quarterly equities revenue ever reported by a Wall Street bank.

| **Equities Revenue Breakdown** | **Q1 2026** | **Change (YoY)** |

| :--- | :--- | :--- |

| Total Equities | $5.33B | **+27%** |

| Equities Financing | $2.61B | **+59%** |

| Equities Intermediation | $2.72B | **+9%** |

*Source: Goldman Sachs earnings release *

The driver of this record was **equities financing**, which surged 59% year-over-year to $2.61 billion . This business—primarily prime brokerage lending to hedge funds—benefited enormously from the market volatility triggered by the Iran war.

"When clients are uncertain, they rebalance. When they rebalance, they need financing. And when they need financing, Goldman's prime brokerage desk prints money," one industry observer explained.

### The Iran War Effect

The war created the perfect conditions for Goldman's equities business. Rising crude oil prices fanned inflation fears and exacerbated worries about a recession . The heightened volatility across asset classes pushed up the need for clients to reassess portfolios and hedge downside risks—a practice that typically buoys trading desks at large banks .

Goldman Sachs noted in its statement that the major sources of market volatility this year include the Iran war, uncertainty in the artificial intelligence sector, and risk concerns in the private credit market . As one of the largest market-facing operations on Wall Street, Goldman Sachs benefited particularly significantly from its scale advantage in this high-volatility environment .

CEO David Solomon acknowledged the complexity of the backdrop. "The geopolitical landscape remains very complex – so disciplined risk management must remain core to how we operate," he said in the earnings release .

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## Part 3: The M&A Rebound – An 89% Surge in Advisory Fees

### The Deal Flow Returns

After a two-year slump, mergers and acquisitions are back. Goldman's M&A advisory revenue surged **89% year-over-year** to $1.49 billion . Total investment banking fees rose 48% to $2.84 billion, significantly beating analyst expectations .

| **Investment Banking Revenue** | **Q1 2026** | **Change (YoY)** |

| :--- | :--- | :--- |

| M&A Advisory | $1.49B | **+89%** |

| Equity Underwriting | $535M | **+45%** |

| Debt Underwriting | $811M | **+8%** |

| **Total Investment Banking** | **$2.84B** | **+48%** |

*Source: Goldman Sachs earnings release *

The advisory surge was driven by a "significant increase in completed mergers and acquisitions volumes" . Wall Street executives expect a strong year for M&A despite the current uncertainty from the Middle East conflict, as a softer stance on regulations under President Donald Trump's administration and the artificial intelligence boom are likely to underpin much of the activity .

### The Marquee Deals

Goldman advised on some of the largest transactions of the quarter:

- **Unilever's $65 billion merger** of its food business with McCormick 

- **Equitable's proposed $22 billion tie-up** with Corebridge 

- **Multiple other large-cap transactions** across technology, healthcare, and industrials

Global M&A volumes hit **$1.38 trillion** in the first quarter, according to data compiled by Dealogic . Analysts at Jefferies noted that global M&A proxy fees rose 19% year-over-year to $11.3 billion, with Goldman leading the pack in market share .

### The Backlog Warning

However, there was a note of caution. The firm's investment banking fees backlog **decreased slightly** compared with the end of 2025 . This "moderate decline" suggests that the pipeline of future deals may be thinning, potentially weighing on revenues in the second half of the year.

The IPO market, in particular, has been hit by renewed uncertainty fueled by geopolitical tensions that have hurt risk appetite in equities . While some companies—especially those in industrials and defense—have pressed ahead with their listing plans, the broader IPO market remains subdued.

---

## Part 4: The FICC Weakness – A $4.01 Billion Drag

### The Other Side of the Coin

While equities soared, Goldman's fixed income, currencies, and commodities (FICC) division struggled. FICC net revenue fell **10% year-over-year to $4.01 billion** , missing analyst expectations of $4.87 billion by a wide margin .

| **FICC Revenue Breakdown** | **Q1 2026** | **Change (YoY)** |

| :--- | :--- | :--- |

| Total FICC | $4.01B | **-10%** |

| FICC Intermediation | $2.95B | **-14%** |

| FICC Financing | $1.06B | **+1%** |

*Source: Goldman Sachs earnings release *

The decline was attributed to "significantly lower net revenues in interest rate products and mortgages and lower net revenues in credit products" . These are the kinds of assets that typically perform poorly when the market is focused on equity volatility and geopolitical risk.

### The Commodities and FX Offset

Not all of FICC was weak. Commodities and foreign exchange showed "significant strength," partially offsetting the pressure . This makes sense: when oil prices spike and currencies fluctuate, trading in those asset classes becomes more profitable.

FICC financing revenue was slightly higher year-over-year, providing a small cushion . But the overall picture was clear: Goldman's fixed income business, which had been a reliable performer in previous quarters, was now a drag on results.

---

## Part 5: The Shareholder Returns – $5 Billion in Buybacks

### The Capital Return Machine

Goldman Sachs returned a staggering **$6.38 billion** to common shareholders in the first quarter . This included:

- **$5.00 billion in common share repurchases** (5.4 million shares at an average cost of $923.49) 

- **$1.38 billion in common stock dividends** 

- A declared quarterly dividend of **$4.50 per share** 

The buyback pace was aggressive, reducing the share count and boosting EPS. However, it also had a predictable side effect: capital ratios declined.

| **Capital Metric** | **Q1 2026** | **Q4 2025** |

| :--- | :--- | :--- |

| Standardized CET1 Ratio | 12.5% | 14.3% |

| Advanced CET1 Ratio | 13.4% | 15.1% |

| Supplementary Leverage Ratio (SLR) | 4.6% | 5.2% |

*Source: Goldman Sachs earnings release *

The CET1 ratio dropped nearly 200 basis points, driven by a combination of share buybacks and balance sheet expansion. Total assets rose from $1.81 trillion at the end of 2025 to **$2.06 trillion** , with deposits climbing to $561 billion .

### The Risk Warning

Risk levels are also rising. The average daily Value-at-Risk (VaR) increased to **$112 million** , up from $80 million in the previous quarter . Interest rate and commodity risks contributed more noticeably to this increase.

For investors, the trade-off is clear: aggressive buybacks boost EPS in the short term but reduce the firm's capital buffer. In a volatile geopolitical environment, that trade-off carries real risk.

---

## Part 6: The Private Credit Shield – Avoiding the Redemption Wave

### The Industry Crisis

The private credit industry has been rattled in recent weeks. Fears that artificial intelligence could erode software companies' earnings and weaken their ability to service debt have prompted investors to seek liquidity with a rush of withdrawals .

Goldman's private credit fund, housed under its Asset & Wealth Management division, defied this industry-wide trend. Investors sought to repurchase just under 5% of shares in the first quarter—redemptions that did not breach its cap .

| **Asset & Wealth Management** | **Q1 2026** | **Change (YoY)** |

| :--- | :--- | :--- |

| Total Revenue | $4.08B | **+10%** |

| Management and Other Fees | $3.08B | **+14%** |

| Private Banking and Lending | $638M | **-12%** |

| Incentive Fees | $183M | **+42%** |

| Investment Income | $180M | **+15%** |

*Source: Goldman Sachs earnings release *

### The Steady Growth

The asset and wealth management division delivered steady growth, with revenue rising 10% to $4.08 billion . Management and other fees increased 14%, driven by higher average assets under supervision, which rose to **$3.65 trillion** .

However, private banking and lending revenue fell 12%, reflecting the impact of lower deposit spreads related to Marcus deposits, despite higher deposit balances . The bank has prioritized this business to generate steadier income, reducing its reliance on more volatile trading and investment banking revenues .

Goldman completed its acquisition of active exchange-traded fund provider Innovator Capital Management earlier this month, lifting its total ETF assets under supervision to $90 billion .

---

## Part 7: The American Investor's Playbook – What This Means for Your Portfolio

### The Divergent Performance

Goldman's earnings illustrate a broader theme: in a volatile, war-driven market, the winners are those with deep client relationships and scale in equities trading. The losers are those exposed to interest rates and mortgages.

| **Business Line** | **Q1 Performance** | **Outlook** |

| :--- | :--- | :--- |

| Equities Trading | Record $5.33B | Strong while volatility persists |

| M&A Advisory | +89% YoY | Pipeline softening |

| FICC Trading | -10% YoY | Weakness likely to continue |

| Asset Management | +10% YoY | Steady, reliable growth |

### The SpaceX IPO Catalyst

One of the most anticipated catalysts for the remainder of 2026 is the **SpaceX IPO** , expected in June. Goldman has secured a spot as one of the lead banks managing the blockbuster offering . Elon Musk-led SpaceX could raise $75 billion at a valuation of $1.75 trillion .

The listing is expected to set the stage for a flurry of bumper offerings this year, including the potential IPOs of OpenAI and Anthropic . Goldman was also among the joint book-running managers in PayPay's $880 million U.S. IPO, which valued the SoftBank-backed firm at $10.7 billion .

### The Risk Factors

Investors should monitor several risk factors:

- **The Iran war**: Continued escalation could further disrupt markets and corporate activity

- **Private credit exposure**: A wave of defaults could hit Goldman's asset management division

- **Capital ratios**: The CET1 decline bears watching, especially if the war persists

- **FICC recovery**: The fixed income business needs to stabilize for the stock to sustain its gains

### The Analyst Take

Goldman's stock has risen over 3% so far this year, following a more than 53% jump in 2025 . The valuation remains reasonable, but the post-earnings sell-off suggests that investors are focused on the weaknesses rather than the strengths.

"The market is pricing in a return to normalcy," one analyst said. "If the war continues, Goldman's equities business will benefit. But if a ceasefire leads to lower volatility, the FICC weakness could become the headline."

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### FREQUENTLY ASKED QUESTIONS (FAQs)

**Q1: How much did Goldman Sachs earn in Q1 2026?**

A: Goldman reported net earnings of **$5.63 billion** , or $17.55 per share, on revenue of $17.23 billion .

**Q2: What drove the profit increase?**

A: Record **equities trading revenue ($5.33 billion)** and a **48% surge in investment banking fees** , particularly M&A advisory .

**Q3: Why did Goldman's stock fall after the earnings report?**

A: The stock dropped more than 4% in pre-market trading due to **weakness in the FICC division** (down 10% year-over-year) and concerns about the one-time **tax benefit** that inflated EPS .

**Q4: What was the tax benefit?**

A: A lower effective tax rate (13.2% vs. 21.4% in 2025) provided approximately **$895 million in benefits** , adding about $2.91 to EPS .

**Q5: How did the Iran war affect Goldman's business?**

A: The war created **heightened market volatility** , which boosted equities trading as clients rebalanced portfolios and hedged risks . However, it also pressured FICC trading and created uncertainty for IPOs .

**Q6: What is the SpaceX IPO and why does it matter?**

A: SpaceX is expected to go public in June, raising up to $75 billion at a valuation of $1.75 trillion. Goldman is a lead banker on the deal, which could generate substantial fees .

**Q7: How much capital did Goldman return to shareholders?**

A: The firm returned **$6.38 billion** , including $5.00 billion in share buybacks and $1.38 billion in dividends .

**Q8: What's the single biggest takeaway from Goldman's Q1 earnings?**

A: In a war-driven, volatile market, Goldman's equities and M&A businesses thrive. But the FICC weakness and declining capital ratios are real concerns. The $17.55 EPS is impressive, but investors should look past the tax benefit and focus on the underlying operational strength—and the risks ahead.

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## Conclusion: The War Economy Winner

On April 13, 2026, Goldman Sachs proved that even in the midst of a global energy crisis, Wall Street's most resilient institution can still deliver. The numbers tell the story of a bank that has adapted to a world of permanent volatility:

- **$5.63 billion** – Net earnings, up 19% year-over-year

- **$17.55** – EPS, beating estimates by more than $1

- **$5.33 billion** – Record equities trading revenue

- **$2.84 billion** – Investment banking fees, up 48%

- **$6.38 billion** – Returned to shareholders in buybacks and dividends

For the clients who turned to Goldman to navigate the Iran war, the firm delivered. For the shareholders who have watched the stock climb 53% in 2025, the quarter was validation. For the employees who earned record bonuses, it was a windfall.

But the post-earnings sell-off was a reminder that markets are forward-looking. The FICC weakness, the declining capital ratios, and the tax benefit asterisk all point to a future that is less certain.

CEO David Solomon's words capture the moment: "The geopolitical landscape remains very complex — so disciplined risk management must remain core to how we operate" .

The age of assuming peace is over. The age of **profiting from volatility** has begun.