We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Higher Costs and Softer FICC Weigh on Goldman Q3 Momentum?
Read MoreHide Full Article
Key Takeaways
Goldman sees softer FICC trends in Q3, while equity trading remains very strong.
Goldman expects non-compensation expenses to rise more than $500M sequentially in Q3'26
Strong IB fee momentum and equity trading could partly offset weaker FICC activity and higher costs.
The Goldman Sachs Group, Inc.’s (GS - Free Report) third-quarter 2026 outlook suggests some pressure on Global Banking & Markets performance, as softer fixed-income trading and higher expenses could partly offset continued strength in investment banking (IB). Speaking at the Barclays 24th Annual Global Financial Services Conference on Sept. 16, CEO David Solomon pointed to relatively softer activity in fixed income, currencies and commodities (FICC), while broader client engagement and capital-markets activity remained constructive. However, Solomon noted that equity trading has been very strong in the third quarter.
The moderation in FICC follows a strong first half of 2026. Goldman generated $6.24 billion in IB fees during the period, up 52% year over year, supported by robust advisory and underwriting activity. FICC revenues totaled $8.60 billion, rising 9%, while Global Banking & Markets revenues climbed 35% year over year to $28.26 billion.
The softer FICC backdrop is worth watching because trading remains a key contributor to Goldman’s Global Banking & Markets revenues and provides earnings diversification, alongside investment-banking fees. Therefore, weaker fixed-income trading in the third quarter could reduce the incremental revenue support from Markets, though continued strength in equities should provide a partial cushion, even as advisory, M&A and underwriting activity remains healthy.
At the same time, rising operating costs could limit the extent to which strong deal activity translates into earnings growth. At the conference, Solomon indicated that expenses are running higher amid elevated transaction volumes and accelerated technology investments. Non-compensation expenses are expected to increase by more than $500 million sequentially in the third quarter of 2026.
Overall, softer FICC activity and a sequential increase in non-compensation expenses could dent Goldman’s third-quarter earnings momentum by limiting the benefits from strong revenue trends. However, the impacts may be partly cushioned by robust equity trading, a healthy IB fee backlog, and sustained advisory and underwriting activity. Thus, while higher costs and weaker fixed-income trading could pressure near-term earnings growth, continued strength across IB and equities should help prevent a sharper slowdown.
Other Banks’ Updated Outlooks
Other banks that provided updated outlooks include Citigroup (C - Free Report) and KeyCorp (KEY - Free Report) .
Citigroup’s third-quarter outlook appears relatively upbeat. Management expects markets revenues to grow in the mid-single digits year over year, supported by equities, financing and foreign exchange. Citigroup also projects IB revenues to increase in the low-single digits, with further upside possible if pending transactions close before the quarter-end.
KeyCorp has come up with an updated 2026 outlook, with revenues projected to rise 8% year over year. Previously, the company targeted revenues to rise 7-8%. The increase is driven by higher non-interest income, which is expected to grow 4-5% (up from the prior mentioned 3-4% increase). KeyCorp anticipates net interest income to rise 9-11%.
GS shares have jumped 16.6% in the past year compared with the industry’s growth of 12.6%.
Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Goldman trades at a forward price-to-earnings (P/E) ratio of 13.16X, above the industry’s average of 13.43X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for GS’s 2026 and 2027 earnings implies year-over-year rallies of 34.2% and 4.9%, respectively. Estimates for both years have been unchanged over the past month.
View the Zacks #1 Rank List
Image: Bigstock
Will Higher Costs and Softer FICC Weigh on Goldman Q3 Momentum?
Key Takeaways
The Goldman Sachs Group, Inc.’s (GS - Free Report) third-quarter 2026 outlook suggests some pressure on Global Banking & Markets performance, as softer fixed-income trading and higher expenses could partly offset continued strength in investment banking (IB). Speaking at the Barclays 24th Annual Global Financial Services Conference on Sept. 16, CEO David Solomon pointed to relatively softer activity in fixed income, currencies and commodities (FICC), while broader client engagement and capital-markets activity remained constructive. However, Solomon noted that equity trading has been very strong in the third quarter.
The moderation in FICC follows a strong first half of 2026. Goldman generated $6.24 billion in IB fees during the period, up 52% year over year, supported by robust advisory and underwriting activity. FICC revenues totaled $8.60 billion, rising 9%, while Global Banking & Markets revenues climbed 35% year over year to $28.26 billion.
The softer FICC backdrop is worth watching because trading remains a key contributor to Goldman’s Global Banking & Markets revenues and provides earnings diversification, alongside investment-banking fees. Therefore, weaker fixed-income trading in the third quarter could reduce the incremental revenue support from Markets, though continued strength in equities should provide a partial cushion, even as advisory, M&A and underwriting activity remains healthy.
At the same time, rising operating costs could limit the extent to which strong deal activity translates into earnings growth. At the conference, Solomon indicated that expenses are running higher amid elevated transaction volumes and accelerated technology investments. Non-compensation expenses are expected to increase by more than $500 million sequentially in the third quarter of 2026.
Overall, softer FICC activity and a sequential increase in non-compensation expenses could dent Goldman’s third-quarter earnings momentum by limiting the benefits from strong revenue trends. However, the impacts may be partly cushioned by robust equity trading, a healthy IB fee backlog, and sustained advisory and underwriting activity. Thus, while higher costs and weaker fixed-income trading could pressure near-term earnings growth, continued strength across IB and equities should help prevent a sharper slowdown.
Other Banks’ Updated Outlooks
Other banks that provided updated outlooks include Citigroup (C - Free Report) and KeyCorp (KEY - Free Report) .
Citigroup’s third-quarter outlook appears relatively upbeat. Management expects markets revenues to grow in the mid-single digits year over year, supported by equities, financing and foreign exchange. Citigroup also projects IB revenues to increase in the low-single digits, with further upside possible if pending transactions close before the quarter-end.
KeyCorp has come up with an updated 2026 outlook, with revenues projected to rise 8% year over year. Previously, the company targeted revenues to rise 7-8%. The increase is driven by higher non-interest income, which is expected to grow 4-5% (up from the prior mentioned 3-4% increase). KeyCorp anticipates net interest income to rise 9-11%.
Goldman’s Price Performance, Valuation, & Estimates
GS shares have jumped 16.6% in the past year compared with the industry’s growth of 12.6%.
Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Goldman trades at a forward price-to-earnings (P/E) ratio of 13.16X, above the industry’s average of 13.43X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for GS’s 2026 and 2027 earnings implies year-over-year rallies of 34.2% and 4.9%, respectively. Estimates for both years have been unchanged over the past month.
Estimate Revision Trend
Image Source: Zacks Investment Research
Goldman currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.