For the first time this year, the market’s reaction to Goldman Sachs’ (NYSE: GS) first quarter (Q2) earnings for FY2026 – made on the 14th of July 2026 – followed trends: a strong trend of growth in net earnings led to the stock registering a massive bullish trend.

Trend Analysis

An interesting development during the earnings call is that it continues to see “robust demand” for private credit, raising $31 billion in Q2 alone. The overall trends as of the first half (H1) of 2026 in both top and bottom line show very strong indicators of outperformance.

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Source: Company Information; Leverage Shares analysis

The company’s commitment to keep compensation and benefits growing – since banks are less about technology or infrastructure and more about the people – remains intact. If current trends continue, net revenue is trending to close out the current Fiscal Year (FY) with a 28% growth while compensation will grow 22% – which is higher than the growth in operating expenses. Meanwhile, net earnings are currently trending towards a towards a solid 38% growth for the current FY.

In terms of revenue share, key business segments and line items largely strengthen trends seen in the past quarter:

Source: Company Information; Leverage Shares analysis

Global Banking & Markets (GBM) – which encompasses most things markets-related – marginally builds up to account for 75% of all revenue across H1 2026. The company ascribed this to be driven by significantly higher net revenues from secondary and initial public offerings: it was the “lead left bookrunner” for SpaceX’s IPO, helped with Google $90 billion equity issuance, and advised on both Dominion Energy’s sale to NextEra Energy as well as the spinoff of NBCUniversal. In equity underwriting, revenues were $985 million, up 130% year-over-year, supported by robust deal volumes across a broad range of transactions.

While Asset & Wealth Management (AWM) – which entails managing over $4 trillion in assets for institutions, financial advisors, and high-net-worth individuals – stepped back marginally in overall revenue contribution, the company reported that it managed $19 billion in inflows for wealth management in inflows. Essentially, the markets remain the leading reason for the boost in earnings and the volume of benefits generated mask the fact that it’s other division also did relatively well. Q2 was its 34th consecutive quarter of long-term fee-based net inflows.

The near-halving of the share of Platform Solutions (PS) within a quarter is a reflective of the fact the Goldman Sachs continues to pull away from retail-facing activities such as credit cards. The company expects quarterly revenues for the remainder of the year to be broadly consistent with that of Q2’s, i.e. at around the $200 million level.

The company also repurchased $4 billion of its common stock this past quarter to boost valuations and announced a boost in dividend from $4.50 to $5.

In Conclusion

While the slowdown in IPO activity in March was attributed to the war in the Middle East by Goldman Sachs in the previous earnings call, there was a curious “gap” in the earnings call: no mention was made of the potential impact from the re-escalation of that same war, given that the ceasefire enacted between the U.S. and Iran had fallen apart a day or so before the earnings call.

Instead, what occupied attention front and center – and possibly dominating conviction in the stock presently – is the company’s statements on AI. As per CEO Solomon, the AI investment cycle is creating significant opportunities in various aspects ranging from structuring and financing to risk management in both public and private markets. He also said that the company sees lots of opportunities to deploy capital to its clients to finance the infrastructure buildout and that the buildout cycle is still in an early stage.

Due to the closure of global energy supply routes, the war in the Middle East is both recessionary and inflationary and – particularly in Goldman Sachs’ case – a demonstrable detriment to one of its segments. Simultaneously, the company has effectively shifted focus towards a buildout cycle that is facing enormous public opposition on account of a variety of concerns.

On the other hand, the classic playbook in the event of a recession has been to pivot to financials and energy. This means that even if the buildout cycle were to be interrupted, the bank remains a classic play if the war were to go on. If the war were to stop and recession shocks subside, it picks up conviction if the AI buildout cycle were to remain intact. If both the war were stopped and the AI buildout cycle gears down, the strong earnings trend remains an attractor, added to which is the strong dividend payout.

In many ways, it could be argued that – despite the fraught messaging generated in this earnings call – the stock has many pillars of support in the favour. But then again, the risks are manifold too.

Professional investors in Europe might consider the 2x Long Goldman Sachs ETP (GS2) and the -1x Short Goldman Sachs ETP (SGS) during bullish and bearish trends in GS’ stock price.

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