Goldman Sachs (GS) Set to Report Q3 Earnings – What to Expect

Goldman Sachs Group Inc. (GS) is set to release its next earnings report this morning, a date circled on many calendars. The stock is currently priced at over $783, a slight dip of 1.59% in the last five days.

Analysts are projecting an average estimated earnings per share (EPS) of $11.06, marking a significant increase from $8.40 in the same quarter last year. Revenue is expected to reach $14.07 billion, representing an anticipated year-over-year sales growth of 10.81%. These projections suggest confidence in Goldman Sachs' performance, driven by improved market conditions and the firm’s diversified revenue streams.

Goldman Sachs reported strong financial performance in both the first and second quarters of 2025. The second quarter saw net revenues of $14.58 billion, a 15% increase year-over-year, and net earnings of $3.72 billion, a 22% rise. Earnings per share (EPS) came in at $10.91, exceeding analyst expectations of $9.53. These results were largely propelled by robust trading operations, with equities trading revenue surging 36% to $4.3 billion.

The first quarter also showed impressive figures, with net revenues reaching $15.06 billion (up 6% year-over-year) and net earnings climbing to $4.74 billion (up 15% year-over-year). EPS for the first quarter was $14.12, again surpassing analyst estimates.

A continuation of this trend is what most analysts are expecting. The expectation is that investment banking will be relatively flat with a possible slight upside, and a similar performance from trading. Asset and wealth management is expected to continue to grow at a steady pace.

However, not all is rosy. Early in 2025, Goldman Sachs economists flagged potential headwinds from new U.S. tariffs on imports. They estimated that these tariffs could reduce S&P 500 earnings by 2% to 3%, demonstrating the interconnectedness of global trade and the firm's financial performance.

Furthermore, the recent decision by Petershill Partners, a British investment group majority-owned by Goldman Sachs, to delist from the London Stock Exchange raises questions about valuation strategies and market confidence. Petershill's management cited dissatisfaction with its share price performance as the primary reason for the delisting, a move that reflects broader concerns about market valuations in certain sectors.

It is easy to get caught up in the bullish sentiment, with the analysts' models and historic reports. However, one should not ignore the fact that the past two quarters have been significantly above trend, and arguably the trading revenues were inflated by a short term market volatility.

While the consensus is that investment banking will hold steady, there is a real risk that an unexpected slowdown in M&A activity, driven by increasing interest rates and a more cautious corporate outlook, could significantly reduce advisory fees.

Furthermore, the bank's exposure to emerging markets, while potentially lucrative, also carries significant risks, including currency fluctuations and political instability. A major crisis in one of these markets could trigger substantial losses, offsetting gains in other areas.