Episode Summary
Executive Summary: David Solomon says the macro backdrop entering 2026 is broadly constructive for risk assets: fiscal stimulus, easier monetary policy, deregulation, and AI-driven capital spending should support growth and markets. He sees the main risk as exogenous shocks from geopolitics or cyber, while expecting stronger M&A, improving IPOs, and continued AI investment. Goldman is using AI to streamline processes and deepen its core strengths.
Main Topics: 2026 macro outlook is supportive for growth and risk assets (Priority: 5/5): Solomon argues the combination of fiscal stimulus, monetary easing, deregulation, and AI infrastructure spending creates a favorable environment for markets and business investment, though geopolitical uncertainty could cause volatility. U.S. retains a structural growth advantage over Europe and China (Priority: 5/5): He says the U.S. benefits from superior tech, innovation, capital markets, and financial infrastructure, while Europe remains sluggish and China’s economy is still soft despite equity market gains. CEO sentiment and policy uncertainty at Davos (Priority: 4/5): He expects CEOs to remain constructive but cautious, with concern about inconsistent policy signals outside Washington and a preference for stability and opportunity. M&A and IPO activity should improve in 2026 (Priority: 5/5): Solomon predicts 2026 could be one of the best M&A years ever if no major exogenous shock occurs, and he expects IPO conditions to keep improving as private equity and late-stage private companies come to market. AI investment, productivity, and labor market disruption (Priority: 5/5): He says AI is not losing steam and will continue driving capital investment and productivity, though enterprise deployment may take longer than markets expect and some job disruption is likely. Goldman Sachs’ AI and operating model transformation (Priority: 4/5): He explains OneGS 3.0 as a targeted effort to reengineer six internal processes, such as onboarding and KYC, to boost efficiency, employee experience, and capacity for growth. Goldman’s strategic repositioning and culture (Priority: 4/5): Solomon says Goldman has executed on a multi-year strategy that increased revenue, earnings, and market cap, while strengthening collaboration and reinforcing core values of client service, partnership, integrity, and excellence.
Key Arguments: The macro setup is favorable because fiscal stimulus, monetary easing, deregulation, and AI-related capex are all supportive of growth and markets. The biggest near-term risk is not the economic base case but exogenous shocks from geopolitics, cyber, or other unpredictable events. The U.S. should continue to outperform structurally because it has better innovation capacity, capital formation, and financial infrastructure than Europe or China. Europe’s growth problem is structural and its reform agenda is moving too slowly to close the gap with the U.S. Dealmaking should accelerate in 2026 unless sentiment is hit by an unforeseen shock; Goldman’s backlog and client activity support that view. IPO markets are improving as private equity portfolios mature and late-stage private companies decide to go public. AI remains a major growth theme; the main uncertainty is not the technology itself but the speed of enterprise adoption. AI will disrupt some jobs, but Solomon rejects a “job apocalypse” narrative and expects new roles and industries to emerge over time. At Goldman, AI will mostly reallocate work, improve efficiency, and free capacity for more growth-oriented investment. Goldman’s strategic focus has paid off: the firm has grown revenues, earnings, and market value while sharpening its core businesses and culture.
Data Points: Policy rate cuts in 2025: 100 basis points - Solomon said monetary policy was eased by 100 bps last year. Expected policy cuts in 2026: 1 or 2 cuts - He said markets still expect one or two rate cuts in 2026. Draghi plan implementation: 11% - He cited a statistic that only 11% of Europe’s Draghi plan has been implemented. Europe trend growth: below 1% - He described Europe’s structural growth as under 1%. U.S. trend growth: 2% - He contrasted U.S. trend growth with Europe. Europe population: 450 million - Used in comparison of Europe’s economic scale. Europe GDP: $20 trillion - Used in comparison of Europe’s economic scale. U.S. population: 330 million - Used in comparison of U.S. economic scale. U.S. GDP: $30 trillion - Used in comparison of U.S. economic scale. Chinese equity market performance since last year: up 60% to 80% - He said Chinese equities rebounded sharply, even as the economy stayed sluggish. Goldman revenues at end of 2019: $36.5 billion - Baseline revenue figure cited for the firm’s growth since 2019. Goldman revenue growth since 2019: up 65% to $60 billion - He said revenues increased 65% from 2019 to the present. Goldman earnings growth since 2019: up 120% - He said earnings rose 120% over the same period. Goldman market cap increase: from about $70 billion to $300 billion - He cited this as evidence of strong execution. Number of partners: 450 - He referenced Goldman’s 450 partners when describing firm-wide leadership alignment.
Pivotal Quotes: "The macro setup is pretty good for risk assets and for markets." — David Solomon: Opening assessment of the 2026 economic and market environment. "2026 could be one of the best M&A years ever." — David Solomon: His outlook on dealmaking activity if no major exogenous shock occurs. "I'm not in the job apocalypse camp." — David Solomon: His response to concerns that AI will eliminate large numbers of jobs.
Implications: Listeners should expect continued market support, stronger deal activity, and more AI-driven transformation, but with volatility risk from geopolitics and policy shocks. For firms, the message is to invest in productivity, stay flexible, and prepare for slower-but-real AI adoption.
About Goldman Sachs Exchanges
In each episode of "Exchanges," people from the firm share their insights on developments shaping industries, markets and the global economy.