Goldman Sachs posts blowout quarter as JPMorgan records rare miss to open bank earnings season

Goldman Sachs delivered one of its strongest quarterly performances in years on Tuesday, blowing past Wall Street estimates with $18.68 billion in net revenue and earnings per share of $17.01 — against analyst expectations of roughly $13 — while JPMorgan Chase, the largest U.S. bank by assets and the largest in the world by market capitalization, turned in an unusual shortfall, coming up short on revenue, fixed-income trading, and expenses.

The two results kicked off a closely watched bank earnings season. Citigroup also beat estimates on Tuesday, while Wells Fargo's quarter was mixed. Bank of America and Morgan Stanley are scheduled to report on Wednesday.

Goldman's outperformance was driven by a 72% year-over-year surge in equities trading revenue to $6.44 billion — about $1.42 billion more than analysts had expected. Net revenues were up year over year, according to Goldman Sachs' press release.

We entered the quarter with our highest backlog in five years, and even with exceptionally strong revenue production in the quarter, our backlog remains very robust, reflecting the strength and breadth of client engagement across our leading investment banking franchise.— David Solomon, CEO, Goldman Sachs

Among the deals Solomon pointed to as evidence of the significant transactions clients are bringing to the bank were the $13 billion sale of Hugging Face to Nvidia and Integer Holdings' roughly $6 billion sale to KKR.

JPMorgan's stumble was more notable given its scale. According to the New York Post, the bank's earnings per share came in at $5.57, short of the $5.90 analysts had forecast, and its revenue of $50.91 billion fell below the $51.22 billion expectation. Fixed-income trading came in at $5.4 billion, roughly $550 million below estimates. Expenses grew 12% over the past 12 months while revenue rose just 8% — a gap that concerned investors.

Despite the miss, JPMorgan provided updated full-year net interest income commentary, according to reports.

According to CNBC, the quarter was defined by a set of broad macroeconomic pressures — artificial intelligence headlines, uncertainty around IPOs, elevated fuel prices, and climbing borrowing costs. AI, in particular, dominated the earnings calls — with executives at both Goldman and JPMorgan laying out starkly different postures toward the technology's risks and opportunities.

No one knows how the demands for capital and compute will evolve as the broader AI ecosystem matures.— David Solomon, CEO, Goldman Sachs

Solomon said Goldman sees a major financing opportunity in the AI buildout but is being selective about the risk it underwrites. He noted that demand for compute 'significantly, significantly exceeds supply,' creating openings for the bank to develop financing structures — while cautioning that pressure on rates as financing needs grow could affect returns.

According to CNBC, Goldman has put total global AI capital expenditure over the next five years at $7.6 trillion.

JPMorgan's CFO Jeremy Barnum sounded a note of caution, saying the bank is keeping a close eye on its exposure to the heavy spending on data centers and computing infrastructure and that no institution would be insulated from a sharp reversal in AI sentiment.

Our exposures are still quite modest in the context of our overall wholesale exposure, but that's not the same as saying that we would be immune to a major change in sentiment in the AI space. I would be surprised if anyone, frankly, was immune to that at this point.— Jeremy Barnum, CFO, JPMorgan Chase

Barnum said AI financing has spread well beyond traditional construction lending into working capital revolvers and equity markets, and called for stress tests that account for a meaningful shift in the overall theme.

JPMorgan CEO Jamie Dimon drew a firm line on one AI question: the bank will not allow outside AI agents to operate inside the company.

We're not going to allow just any… outside agent to come in inside the company, because it's just too risky for clients and for JPMorgan.— Jamie Dimon, CEO, JPMorgan Chase

You don't want rogue agents, and it could be thousands of them.— Jamie Dimon, CEO, JPMorgan Chase

Dimon said the bank is building tools to guard against potential misuse of AI agents — autonomous assistants capable of acting on behalf of users with limited human oversight — as companies including Meta and OpenAI bring such products to market.

Goldman's Solomon acknowledged the broader concerns about AI frontier models acting autonomously.

Like other transformative technologies, AI presents significant opportunities, but also significant risks that must be carefully assessed and managed. ... We must enable innovation and also demand responsibility.— David Solomon, CEO, Goldman Sachs

At Wells Fargo, CEO Charlie Scharf told analysts the bank is 'devoting significant management time and resources' to AI, using it internally to write code, launch marketing campaigns, and improve risk management, while developing external AI tools to improve customer experience. Scharf also noted that the bank's headcount has dropped every quarter for six years, declining 2% from the prior period, 8% year over year, and 30% from its peak in the second quarter of 2020.

Our underwriting criteria recognize that at some point consumer credit conditions will weaken. To be clear, we do not see signs of this yet, but we know that cycles are inevitable.— Charlie Scharf, CEO, Wells Fargo

Citigroup reported earnings per share of $2.85, beating estimates of $2.66, on revenue of $23.85 billion, above expectations of $23.72 billion. All eyes now turn to Bank of America and Morgan Stanley, which report Wednesday and will complete the picture for the six largest U.S. banks.

Why it matters — The diverging results from the two biggest names in U.S. banking — and their sharply different stances on AI risk — signal where Wall Street sees both the biggest opportunity and the biggest threat heading into 2027.

Reported by reuters.com, goldmansachs.com, nypost.com, cnbc.com