After strong Q1, Goldman Sachs warns of potential Iran 'headwind'

• Key Insight: Even as Goldman Sachs posted a forecast-beating first quarter, CEO David Solomon warned that the war in Iran could drive up U.S. inflation.
• Supporting Data: Earnings per share for the investment banking giant reached $17.55, well above analysts' consensus estimate of $16.39.
• Expert Quote: "The geopolitical landscape remains very complex, and the ultimate impact of higher energy prices on inflation and growth has yet to be determined," Solomon said.

Goldman Sachs CEO David Solomon described U.S. markets as resilient on Monday, and said his bank is "extremely well positioned" to navigate them. But even amid that optimistic appraisal, he acknowledged potential sources of upheaval, including the Iran-shaped storm cloud hanging over the global economy.

"Things rarely move in a straight line, and as the quarter progressed, the macro environment started to weigh on sentiment," Solomon said during a call with analysts. "Volatility increased meaningfully amid concerns around AI-driven disruption in sectors like software, heightened uncertainty in parts of private credit and the conflict in the Middle East."

In the first quarter of 2026, Goldman leapt past Wall Street's expectations. The $2.06 trillion-asset investment bank's earnings per share reached $17.55, up from $14.12 in the same period last year and well above analysts' average estimate of $16.39, according to S&P.

But the quarter also included the start of the current war in Iran, which the United States and Israel launched on Feb. 28. The conflict in the oil-rich region, which has largely closed the Strait of Hormuz to traffic, has caused a spike in energy prices and many related costs. Just last week, new data from the Bureau of Labor Statistics showed a sizable jump in U.S. inflation in March.

During Monday's call, Solomon acknowledged that the war's full impact on commodity prices has not yet been felt, and could potentially last well into the year.

"My guess is to the degree that energy prices remain high, you will see that translate through a little bit," he said. "At this point, the underlying economy still remains relatively robust. But if the resolution of the conflict drags, that probably will be a headwind in some of these areas, particularly inflation trends as we get further into the second and the third quarter."

Over the past year and a half, Goldman's earnings calls have tracked the roller coaster of CEO sentiment since the start of President Trump's second administration.

In January 2025, Solomon noted a positive shift in chief executives' moods following Trump's reelection. One quarter later, he expressed their concern over Trump's historic tariffs and even a growing risk of recession. Then, in October last year, he noted a "meaningful improvement" as businesses adjusted to the new normal.

One quarter into 2026, Solomon mostly maintained that optimism, calling the current environment "a pretty constructive investment banking ecosystem."

In particular, Goldman's CEO applauded recent proposed changes to U.S. banking regulations. Those measures include federal regulators' new proposals for implementation of the Basel III accords, as well as for the capital surcharge on global systemically important banks. Taken together, the changes would significantly reduce the amount of capital big banks are required to hold to guard against risks to the financial system.

"We're encouraged by the direction of regulatory reform, including the recent Basel III finalization and G-SIB surcharge re-proposals," Solomon said. "While the rulemaking process is still underway, and we plan to participate in the comment period, we believe this direction is positive for the banking system as a whole."

At the end of the first quarter, Goldman's standardized Tier 1 capital ratio was 12.5%, down from 14.8% one year earlier.

Balancing the constructive regulatory changes, Solomon said, is the upward pressure on prices emanating from the Strait of Hormuz.

"The geopolitical landscape remains very complex, and the ultimate impact of higher energy prices on inflation and growth has yet to be determined," Solomon said.

A golden first quarter

In spite of the tumultuous geopolitical backdrop, Goldman Sachs enjoyed a record-breaking quarter in the first three months of 2026. Net income reached $5.63 billion, up 19% from the same period last year and handily beating estimates of $5.05 billion, per S&P. Revenue was $17.23 billion, 14% higher than one year ago and surpassing analysts' forecasts of $16.93 billion.

Goldman "posted a strong quarter driven by better-than-expected revenue growth, beating estimates in investment banking, asset and wealth management, and markets," Gerard Cassidy, an analyst for RBC Capital Markets, wrote in a research note.

One highlight was Goldman's Global Banking and Markets division, which handles mergers and acquisitions and other institutional banking. In the first quarter, the unit took in net revenue of $12.74 billion, marking a 19% increase from one year ago — and setting a new record.

"It was the best Global Banking and Markets quarter ever for the firm," Solomon said.

Meanwhile, the bank also continued to shed the baggage of its ill-fated foray into consumer banking. In the first quarter of 2026, its Platform Solutions unit, which contains remnants of the consumer banking initiative, earned net revenue of $411 million — a 33% drop from one year ago, but up from a loss of $1.68 billion in the previous quarter.

In January, Goldman announced that it was transferring the Apple Card to JPMorganChase, which plans to take over the card's $20 billion of balances over the next two years.