artificial intelligence It could be a new goldmine for investment bank Goldman Sachs, CEO David Solomon said.
Although there is “broad consensus about the transformative potential of AI,” Goldman has already seen “significant appetite” from clients for advice and support on AI strategies and the potential to continue working in this area. Solomon said Monday.
“There is significant demand for AI-related infrastructure, and as a result, funding will be a tailwind for our business,” he said on a call with analysts Monday morning. The company reported first quarter earnings.
Solomon said this will not be a quarterly project, but part of the investment bank's focus over the next five to 10 years to serve both companies and governments looking to build AI infrastructure. Solomon said the “level of scale” of AI infrastructure that governments and companies are building is “frankly unprecedented.”
Solomon said there are “huge productivity opportunities and efficiency opportunities” as AI is introduced into investment banks' own business practices.
Goldman's first quarter was strong., the reopening of capital markets has given investment banks a broad boost. Net revenue for the first quarter of 2024 was $14.21 billion, up 16% from $12.22 billion in the first quarter of 2023 and roughly in line with analyst expectations compiled by FactSet. These results were driven by record or near-record performance in the Investment Banking and Equities divisions.
Net income rose 28% to $4.13 billion, or $11.58 per share, beating Wall Street estimates of $8.73 per share, according to estimates compiled by FactSet. In comparison, his profit for the same period last year was $3.23 billion.
Competitors of major banks JP Morgan Chase, Citigroup and Wells Fargo both beat expectations. The company announced its first-quarter earnings before the bell on Friday.
“Goldman Sachs has improved over the past two years, supported by a recovery in investment banking and a reduction in revenue drag from platform solutions and CRE impairments,” said David Fanger, senior vice president at Moody's Ratings. We reported our strongest quarterly results.”
Solomon said the number of initial public offerings through 2024 is a positive sign for capital markets and is a key part of Goldman's success. Number of large IPOs by region in the first quarter of this year includes: Galderma and redditactivity in 2023 was the lowest in 10 years, a “strong sign that investors' risk appetite is increasing,” he said.
“Our current position is clearly that we are in the early stages of reopening the capital markets,” he added.
Despite the surge in sales, Goldman's operating expenses rose just 3% from a year earlier, boosting profits. The investment bank's net provisions for litigation and regulatory proceedings were only $23 million in the first quarter of 2024, about one-third of the year-ago period. Goldman also cut its headcount by 2%. Sale of housing finance company GreenSky; Last October.
The sale was part of the bank's efforts to move away from consumer banking and strengthen its two core services: Global Banking & Markets and Asset & Wealth Management.Sales results are $506 million loss Solomon said the reopening of capital markets and business opportunities in Goldman's core areas marks the beginning of a turnaround for the bank.
“This performance was supported by the rapid actions we took last year to sharpen our strategic focus and develop our core strengths,” Solomon said in the earnings call.