The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

Thank you, [ Tricia ] for the lovely kickoff. So David, thank you for being with us in South Florida.

Thank you for having me. I'd much rather be in South Florida than the Northeast. So I'm delighted to be here.

So maybe let's start at the top in terms of your strategic priorities. You've continued to make significant progress against them. You laid out some of your plans in the recent strategic update. And of course, as everybody in the room knows, the stock has meaningfully outperformed many of your peers. So maybe let's talk about some of the most significant changes over both the longer term in the past year and maybe how Goldman is positioned for the forward?

Sure. So thank you again for having me, and I'm delighted to be here. The firm has really, for the past -- for the past 6 years, been in execution mode against the plan that was laid out in early 2020 to grow the firm. And after a period of time coming out of the financial crisis where the firm really didn't grow, we made a very concerted effort to really invest in the growth of the firm, invest to strengthen the client franchise. We had a clear understanding that if we could put more financial resources toward our client base, we could capture market share and we could grow the firm. And we've made a lot of progress against that. I think there are a handful of significant things that we did in what I'll call the first wave the strategy to grow the firm. The first, which really is, in some way, envisioned in the narrative of One Goldman Sachs, we really made an investment to improve the client franchise, the client centricity of the firm and to really ensure that we were doing everything we could to deliver for our clients in a very holistic way. And we've gotten incredible feedback on that. But more importantly, when you look at market share data across all different businesses in the firm, that approach has really enhanced our market shares, I think, meaningfully. Secondarily, we increased the resources available to serve our clients, particularly resources as a lender and a financier of our clients. And one of the things that we believe deeply if you're financing your clients and you're providing the liquidity that they need to run their businesses, it comes back in a virtuous cycle. And so we were really operating as an intermediary without being as big a financier, and we've shifted that materially, and that has elevated our position with our client base and has also contributed to market share gains. Third, we had a whole handful and a half of Asset and Wealth Management businesses that were operating as independent businesses and weren't getting the benefit of a scaled platform. And I think the most difficult thing we did was we put all those businesses together and created what is now Asset and Wealth Management, which is the fifth or sixth, seventh, depending on how you look at it, largest active asset manager, supervising over $3.5 trillion, and we went out to the world and said, we can grow this high single digits in terms of its durable revenue and improve the margins. We just, in January, increased the margin targets and the return targets for that business, and that business is growing better than 10% and it's growing double digits. And we think there's a lot of runway to continue to grow it, but we also think there's opportunities to kind of accelerate that growth inorganically. And you saw us do 3 things last year that have enhanced the trajectory of that business, the partnership with T. Rowe around retirement and both Innovator, which gives us a top 10 position in active ETFs and also iVentures, which is obviously a very, very interesting activity for our wealth clients. And then wealth continues to be just when you look at ultra-high net worth wealth and what's going on in the world, the opportunity set to continue to grow that and capture more share there and to continue to scale that platform is another big opportunity for the firm that we continue to be very focused on. And so that's kind of been the execution strategy up to this point. When you look forward now, and we've been talking about this consistently, I think changes in technology allow us to remake operating processes and create more capacity to accelerate our growth as we look forward. And we're extremely focused on kind of operating in an environment where for the first time in a long time, we are not so constrained. And there are 2 things that are changing that. One is the regulatory environment, both in terms of the capital rules and the way that sets up. And then secondarily, the regulatory burden in terms of the number of people and resources we had to have addressing regulatory requests of us has backed off, and that frees up more capacity to scale wealth and continue to invest in the business. So I think we're in a terrific position. We obviously, given the macro environment, I think, have pretty good tailwinds around M&A and capital markets activity, but we can talk about that. And I tend to look at those things over quarters and years, not over days and weeks when you see a little bit of volatility. But I still think structurally, the macro environment for a very strong M&A and capital markets couple of years is in place. And so I think the firm is very well positioned to continue to execute and deliver for shareholders. And so we feel good about the state of the franchise, feel good about the opportunities in front of us and feel like the environment sets up very well for the firm.

So before we unpack all the good things that are happening at Goldman, maybe we'll go to the tailwinds that you mentioned, David, about the current operating environment. I think optimism would be an understatement in terms of how investors entered the year with regards to capital markets expectations. So what is your current view on the macro environment and the '26 outlook? And what is particularly on top of mind for your clients? And obviously, you brought it up, capital markets is about the momentum over quarters and years, not weeks. I do have to ask you whether or not some of the concerns, the recent volatility in the software sector has given you pause.

Yes, sure. So I'd just start by saying the firm has a deep risk management culture, and there isn't a day that goes by no matter what the environment is and no matter what's going on, that we don't have armies of people thinking about risk and risk management and what can go wrong. I wake up most mornings, I woke up this morning, and I was thrilled to see an article in the Wall Street Journal that talked about Goldman Sachs contribution to the Dow's move from 25,000 to 50,000. My first reaction to that is what can possibly go wrong, not oh good. And so we come with a mindset of things will go wrong, and you've got to be prepared to adapt and risk manage around that. And so we start from the place of risk management. Let's start with the macro setup. The macro setup is very good broadly. There are a bunch of things going on that create tailwinds, broad tailwinds for risk assets. There's a very significant amount of fiscal stimulus in place, and we're operating in a world where it's very, very hard to see governments, developed economies back off of that fiscal stimulus. In addition, a very significant bill was passed last year in the United States, the provisions of which are very fiscally stimulative, and they picked up, they all popped in, in 2026. So you added to that fiscal stimulus. Second, you have a massive deregulatory trend in the United States after a very tough regulatory period in the United States across all industries. And one of the things about regulatory is it requires resources to respond. And so that's coming into more balance. And for industries broadly, it's freeing up capacity to invest because the burdens -- there should be a regulatory structure. I'm not an anti-regulatory person, but the burdens got to be kind of absurd across a range of industries, and they're getting to a more balanced place. And so that's a tailwind for more growth. Number three, we're going through a technology super cycle where there's a massive amount of investment, and that's a structural tailwind for growth in the economy. Three, we have midterm elections and a President here in the United States who is going to take populist actions as we head to those midterm elections and those populous actions have a tendency to be stimulative. So when you look at all those things, those things create tailwinds for risk assets broadly. Now what can go wrong? There's a lot of policy uncertainty. While the President is doing populous things, he also has a tendency in policy to move from policy action to policy action. I'd still say there's uncertainty around trade. There's uncertainty around inflation and there's uncertainty on geopolitics for sure. And all these things can contribute at some level to creating speed bumps or slowing down some of that positive macro momentum. But in the broad distribution of outcomes, I think the likely outcome in 2026 is we're going to have a pretty constructive year for capital markets, a pretty constructive year for M&A, particularly large-cap strategic M&A. And the result of that should be very favorable for the people in this room and the institutions that you cover. But there's certainly plenty of things that could go wrong. And I would not -- I would be surprised, I was going to say I wouldn't be surprised if we have an event like the event we had in April last year that slowed everything down for a period of time. But I'll put it differently, so I wouldn't be surprised. I would expect that we'll have something like that will happen that will create somewhere in the year a speed bump or recalibration or slowdown. And I think there are a bunch of things that you can worry about on that front. Certainly, geopolitical things and policy issues. But I'd also say what's going on with AI and technology also has the potential to create recalibrations. And there are going to be winners and losers, and this gets to your software question. There are going to be winners and losers. But -- and we've been thinking a lot about technology disruption. But when you start painting spaces with a broad [indiscernible], I don't think that's appropriate. When I look at software exposure broadly, Goldman Sachs runs a big, big platform. Our broad -- we have software exposure, but I'd say it's insignificant in the scale of our overall platform, but it's certainly something that we're monitoring. I think the narrative over the last week has been a little bit too broad. There'll be winners and losers and plenty of companies pivot and do just fine.

So let's double-click on some of your comments on advisory. You are the #1 M&A adviser around the world. And you've touched on some of the preconditions for that kind of activity. Maybe unpack that a little bit more and also talk about where you think equity capital markets and debt capital markets are going to go in 2026.

Sure. So there are 2 big drivers for -- this is overly simplistic, but there are 2 big drivers for M&A activity, strategic M&A activity on the part of big corporates and sponsor M&A activity. The strategics for the last 5 years in a different regulatory regime, whatever the question was, the answer was no. Now whatever the question is, the answer is maybe. And scale matters enormously. Competitive positioning through scale matters enormously. There isn't a CEO in the world that hasn't woken up and said, now is a moment for some period of years where I can do things strategically to strengthen my competitive position. So every CEO in the world is thinking about how that applies to them and what they can do. And we obviously have a great lens into this, given our leading advisory position because you engage in dialogues, you get mandated to think about things, and that gives you an ability to have a pretty broad lens as to what's going on. And I'd say there's a lot going on. Now not all of it will come to fruition, but the pickup in activity, we've manifested it in comments we've made publicly about our advisory backlog indicates that the level of M&A activity is going to be meaningfully higher than it's been on average over the course of the last 5 years. I think there's very little to likely upset that path on the strategic stuff. Of course, if there was a big exogenous shock, it would slow it down, but that's not my base case that there's going to be a big exogenous shock this year. And so CEOs see that opportunity and they're running toward it. With respect to sponsors, we've all kind of been waiting impatiently for that to accelerate. I think we're reaching a point where it's accelerating. You all probably saw John Gray on television last week when he reported his earnings, make a very, very strong statement that they are going to sell a lot of things this year. Now of course, there are things that can get in the way of that, too. But I think we're reaching a point in time where that unlock is occurring. And so all that's quite constructive. I think the other thing that's going on with respect to the equity capital markets is you have a handful of these very, very large companies that have decided for a variety of reasons, they want to get to the public markets. For some of them, it's just the scale of the capital has gotten to a place that they want that additional channel. And so I think you're going to see a handful of those happen. And just generally speaking, that will create a more constructive IPO market. In terms of the M&A market, I think this could be a top decile, top quartile, certainly, potentially top decile kind of M&A opportunity set. In terms of equity capital markets, it's not going to look like it looked in '21, which was the last kind of top quartile, top decile opportunity set, but it's going to be a significant improvement over the base that we've seen over the course of the last few years. And I think that has reasonable momentum at this point in time. And I look at the backlog, I look at people that are going to go, and I think it's going to be a better pull-through than what's been expected. And of course, at any point in time, if there are big exogenous shocks, things can slow down, but the direction of travel, I think, is clear.

Just wanted to follow up on the sponsors because we've been waiting and waiting and waiting for the sponsors to monetize. Where are we in terms of the timing versus valuation discussion?

I think we're at a point where -- sure, you can find lots of companies where the sponsors want this, the sponsors want that. I think the pressure on the sponsor community, this is a generalization, of course, with every firm, it's different. But the pressure from the LPs at this point and people are getting into fund cycles where they've got to raise more money, they've got to return capital. And so the valuation is becoming less important. They've got to return capital, whether they're selling stuff and they're going to the M&A market or they're getting stuff public, they've got to return more capital. I just think the pressure from the LP community and the cycle life of fundraising has reached a point in time for most of these firms that they can't get into the valuation debate as much as they've got to move forward. So I think you're going to see an improvement in that for sure.

And just as a follow-up here on debt capital markets, given the -- your expectations for advisory activity and lower rates, DCM has been a big help for all of the big firms. Is that going to continue from a momentum standpoint?

Yes. There's significant activity. That activity has to be financed. And so I think you're going to see an improvement. Again, the debt equity capital markets activity is not going to look like the peak levels that we saw in 2021 during that moment. But they are accelerating off a base. What's going on around AI infrastructure is creating an opportunity is enormous. You look at Google, I think, just yesterday did another significant financing and they're in the market, doing some financings overseas, I believe, today. The need for capital to continue on this technology cycle is going to have an impact on the overall capital raising cycle. And so I see all this stuff accelerating. And I feel pretty good about it. That doesn't mean it all happens perfectly in a straight line, it won't. But we're just in a different place than we were in 2022, '23 and '24, and you're going to see the benefit of that pull through.

So I wanted to switch to the trading outlook. And last year, the industry saw the trading wallet expand. And of course, your firm performed very strongly in that context. So how are you thinking about the FICC and equities outlook from here? And then I just wanted to unpack maybe this discussion and talk about durability here versus just cyclicality.

Sure. The environment -- the environment for trading continues to be constructive. But I think one of the things that -- that people miss, the size and the scale of these businesses for the leading players and the breadth of products and services create, broadly speaking, more durable businesses. And there's a lot of activity in the world. There are a lot of people moving money around in the world. Some of the volatility that we saw last week creates opportunities, too. And when we look at these businesses, we try to kind of look and say, okay, let's look at 10-year averages. We put up a great chart. I think it was a year ago, right, a year ago in our -- one of our updates, basically saying, take the 10-year lows, okay? Now look at the variability in the high. I think what we love about our business, when there is volatility that creates upside wallet. We, I think, do as good a job, if not a better job, capturing a better share of that upside potential in those environments. But when you look over a 10-year period, these businesses are big, durable businesses that create a certain amount of activity, and they just operate with fundamentally much less leverage than they operated with 15 years ago. And people think about them through a rearview mirror lens, not through a forward lens. So that doesn't mean that if we had a very difficult economic environment for a period of time, there couldn't be slowdowns in these businesses. But there's a base durability, especially given all the financing that's going on in these businesses. And that's one of the reasons why we try to break out the financing and the intermediation so people can see that to put a base under these markets businesses.

So as we move forward, what areas are you focused on to drive additional wallet share? And also, you mentioned deregulation a couple of times during this fireside chat. Are there opportunities to regain some of the market share that was maybe scattered when prudential regulation around the world was getting built up post financial crisis?

So in wallet, when you talk about wallet in our core business of banking and markets, our operating philosophy is to constantly look at everything we do and try to diligently understand where we're outperforming, where we're underperforming. And any place we're underperforming, try to adjust. Again, these are big, big, big businesses. We've been the leading M&A adviser for 23 years in a row, which is really extraordinary to have a position like that for that period of time. I think one of the reasons why is because I know that team, while we might be #1 every year for 23 years, 1 year, we're #3 in health care instead of #1. One year, we could be #5 in consumer, but we're #1 in energy and tech. We're constantly looking at where we have gaps and trying to say how can we improve those gaps. The goal is to not just be #1 across the top, of course, that's the overriding goal. The goal is to ensure we're as close to #1 in every subsector we can possibly be and to strengthen the overall lead we have in that leadership position. And that's no different than the way we look at our markets wallet share. We have 150 accounts that we call the top 150. They're the biggest, most important accounts. They're a significant part of the overall markets business wallet. We're top 3 with 123 of those 150 accounts. We're also looking at the 123 that we're top 3 with and saying, how many are we #1 with? How many are we 3 where we should be 2? How many are we 3 where we should be 1? How many are we 2 where we should be 1? There's a constant process of saying how do we improve gaps that exist in our wallet and improve our wallet share. And if you do that, you edge along over time. Now we made some very significant wallet gains, and I'm not sitting here saying we have that kind of wallet to improve, but there's a discipline in the firm from an operating perspective to always try to add to wallet and maximize wallet. And we remain very, very focused on that wallet opportunity.

So switching gears to Asset and Wealth Management, which is clearly a big focus area for you and a big focus area for your investors. So top 5 active asset manager globally, demonstrated your durable revenues here and also updated your medium-term targets, which will unpack. What underpins your confidence in achieving these targets? And what's your growth strategy from here?

So -- the question, we get asked a question about targets, what underpins your confidence? On one of the -- we would not put a target out unless we had really done the work, and we were really confident that we had the building blocks in place to deliver on that target. What's driving the target changes in Asset & Wealth Management, which is really the margin and the returns is we had all these businesses, we put them together. They had a lot of capital in them. We've been bringing the capital out, that improves the returns. And we've been scaling these alternative platforms and the alternative platforms are going on fee. You could all look -- everybody here can look at other alternatives platforms. Other alternatives platforms have higher margin. The profitability contribution from alternatives as opposed to the more traditional asset management business is higher margin. That mix has been improving as we scale our alternatives business, and we're raising $75 billion to $100 billion of alternatives each year, and they're going on fee. And so it's been a journey. That's why we said we can get to 25%. Now we said we get to 30% margin because we're adding the building blocks. And you can see we see the fundraising target. We see how much more is going to come on fee, and it gives us a lot of confidence that we can grow the durable revenues. As we've said, as you grow those durable revenues and they come on fee, the margin mix is improving, and that gives us a lot of confidence that we can hit the targets. And so asset management, there are a lot of people in this room that know this. The asset management business is a very good business, especially if you have franchise positions to continue to bring new fee-paying assets into your business. I think one of the things that makes our platform so attractive is the platform is set up globally at scale across all silos. So we're very well positioned to have tailwinds on our ability to bring long-term fee-based flows in as we look forward and not all asset management businesses are positioned that way. Our wealth channel is also super attractive and super unique and the wealth channel drives some of that opportunity. We obviously focus on this ultra-high net worth channel. But if you look at what's going on in the world and what's going on with asset prices, you look at the generational wealth transfer that's coming up, that wealth channel is very well positioned, and that adds to our confidence in our ability to continue to deliver the growth that we've suggested we can grow here.

So let's unpack that in terms of the ultra-high net worth franchise is a key driver of growth. This is clearly a part of the wealth management ecosystem that a lot of firms are looking to expand in. What's differentiating Goldman here? And maybe detail some of the key opportunities that you're focused on?

Well, we have -- the core wealth business at Goldman Sachs is if there are 100,000 Uber wealthy people, and we do this around the world, but let's just take the United States for more. If there are 100,000 Uber wealthy people in the United States, don't take this as a fact, take it more as a direction. 15,000 of them have wealth at Goldman Sachs. And so for starters, there's no reason why 20,000 of them couldn't have wealth at Goldman Sachs, but it scales with people and footprint. This is a business that is a high-touch, high service personal trust kind of business. We're very good in those kinds of businesses. We know how to scale those kinds of businesses. We know how to operate them, but you have to do it over time. They scale with people. And I just think we're very well positioned for that. There are other opportunities for us in wealth that we're approaching slightly differently. There are people that have broader high net worth wealth platforms, and they need manufacturing capability of really interesting products. We have extraordinary manufacturing capability in our asset management business. And so we are a very attractive manufacturer of product. Our brand is attractive. And so other people's distribution, people like partnering with us. And so when you look broadly at third-party wealth distribution, we're a very, very attractive partner in that. And so we have access to lots of other people's distribution channels to very, very significant wealth. But there, we don't own the client privity, we're creating the product for other people's clients. So I think we're very well positioned in this ecosystem, very, very strong growth opportunity in the ultra-high net worth area and continuing to scale that all over the world. And I think it's a very -- I think our business there and our brand there is very unique. That doesn't mean there aren't certain competitors, but we run a very, very unique platform in that business.

Before we talk about manufacturing, I just wanted to make sure we stopped at your new annual long-term fee-based net inflow target for your wealth management business. Could you help investors maybe understand the decision to focus on this target for you?

Yes. We wanted to put out something that we could track. And by the way, there are 2 reasons to create targets. One reason to create targets is to give people outside investors a sense of what we're doing and to create a road map and transparency for them. Another is to hold our people internally accountable for what we expect them to do to actually grow the business. And so we came to this target as a way to set expectations internally as to what we expected to drive the growth of the business so that we can kind of rally the organization behind a goal that if we execute on that, we believe we can or we would not have put the target out, we can continue to deliver on what we need to deliver on our wealth growth.

So on alternatives, I think since your first Investor Day, you fund raised $440 billion. You mentioned the $75 billion to $100 billion per year target, which would be a 2030 AUS goal of $750 billion.

$750 billion of fee-based stuff in..

$750 billion fee-based. Where are you seeing the most demand at the moment?

It's -- you're really seeing it across the spectrum of the opportunity set. As we've said before, we have 2 businesses that really are truly scaled, credit and what we call XIG, our external investing platform. And there's good demand there, but there continues to be good demand around infrastructure. And there continues to be demand, and I think this is one of the things we can deliver from our clients for tailored solutions. So you're talking to a huge sovereign wealth fund in Asia that doesn't have enough exposure to European credit. And so can we create a European credit sleeve that's specifically designed to meet exposures that they want. Because of the scale of our platform, we have an ability to do things like that. And so I think I'm seeing more tailored solutions for sure, in the alternative space. And I think that's something that will continue. I think it's also important to put out when we -- we've talked about this fundraising, and correct me if I'm wrong, Jehan, we're talking about fundraising and we're not talking about leverage in the context when we talk about fund sizes and some of the stuff. And so others talk about the leverage and the fee-based stuff. We're talking about the fee-based stuff.

So maybe just to top off this conversation, there's a secular trend clearly in wealth on -- towards higher allocation to private assets and alternatives. We heard that from my boss yesterday. I'm sure we'll hear that from Morgan Stanley later this afternoon. So how are you thinking about that in context of your business and your wealth growth?

Well, there's no our client base in our wealth business has been deep in alts for a long, long time. And one of the things that brought people onto our wealth platform, very, very wealthy people onto our wealth platform is the access they got to alts products, to private products, whether it was direct, our manufacturing and our access to stuff that was super attractive and super attractive funds or super attractive individual investments and individual growthy companies. And so that was something that was certainly attractive. So they've been deep in. What you're talking about a little bit now is there's no question that a broader array of wealthy investors, particularly high net worth wealth investors want access to these privates. They want access and retirement. They want an allocation to this. And we're seeing the expansion of that and the distribution of these products in different forms into those channels. I think that is something that has pretty significant secular tailwinds, but it's not going to be without bumps and bruises. And from a risk management perspective, it's something we're thinking about very, very carefully and very thoughtfully. These are long-dated illiquid products. There are certain liquidity provisions, but generally, these are less liquid products. And I think it's important as you grow the distribution of this to be very, very thoughtful about how they're sold, how they're marketed, whether investors really understand what they're buying, whether it's appropriate. And I think those are things that require a lot of time. But the secular growth and allowing people to participate, I think, is happening for sure. It's one of the ironies that I find very, very interesting is we put enormously high standards on letting people take long-term positions and things that should be reasonable investments. Of course, there's risk. But there are lots of other things you can buy in this world that have no regulatory oversight that are a lot riskier and the parameters are different. So this is a good thing, I think, for participation in capital markets and capital formation. It is one of the strengths of the U.S. financial system that people have the risk mindset and they want to participate in this. I think we all as participants in the market have a responsibility to be very thoughtful and disciplined on how we execute against it over time. And there will be speed bumps because people will do things that need to be ultimately reined in or have better guardrails or provisions around them.

That's very much in line with what our CEO said.

Good. Okay. Well, then Sergio and I see it the same way.

Absolutely. Let's switch gears to capital, right? And I guess let's just put this in context because we're at a seminal moment for deregulation here in the U.S. So maybe quick thoughts on that. And you're sitting on so much excess capital. Where are the most attractive places to deploy this organically?

Well, you said we're at a seminal moment for deregulation. It seems every few years, there's a seminal moment for deregulation. I think what's happening now is a reaction to how hard the pendulum swung over the last 5 years. But I think the big thing that's going on, forgetting about the short-term swings is Dodd-Frank created a regulatory structure and significantly -- I mean, if you really step back, even though Dodd-Frank was 1,800 pages, the 2 principal things that Dodd-Frank did was it took leverage way down in the regulated financial system and it took liquidity provisioning way up, which fundamentally made the system more safe and more durable. That doesn't mean that the system is without risk. But we're now 17 years past that. We operate in a different world with different scale businesses. And one of the things that had been going on is that capital was continuing to grow in these large institutions. And there's a cost to that. And it's never going to be perfect, but I think you want to operate here in the U.S., a banking system that is safe and secure. But of course, safe and secure, there's going to be risk, but you want to have as much of the capital lending and redeployed and recycling into driving growth and investment. And so I think we're getting a reset around that to a much healthier place. It's interesting. Jay Powell, when he came in, said, I think capital in the banking system is about right. Yes, capital in the banking system during Jay Powell's tenure has grown, these are rough numbers, 25%. And every year, he would say capital is about right, the capital will grow some more. Capital is about right, the capital will grow some more. So we're going through a process of kind of resetting to a level that frees up capital to be deployed into the system in a variety of different ways. And this tails back to a question that you asked that I didn't answer for you is there a little bit of rebalancing. So there's a bunch of lending activity that was in the regulated banking system that got pushed to other participants to insurance platforms and to other participants in private credit and the banking -- the regulated banking sector is going to be more competitive on a lot of this lending, given the way whether it's SLR or the overall capital regime has shifted, that's going to change that competitive environment a little bit. For us, the capital waterfall hasn't changed. It's the same thing. We want to deploy capital to serve our clients. And where we see opportunities, we are going to deploy. It's not infinite though. And as a result of that, if we don't -- if we can't get the capital deployed in the business to add accretive returns, we will do what we can to return that capital back to shareholders where they can recycle it. And I do operate with a point of view that we have to get the capital out of the business because just keeping the capital in the business drags returns. And of course, there can be some short-term management of that. But at the end of the day, our job is to get it deployed against our client base and our business where we can earn incremental returns. But if we don't see those opportunities, our job is to get it out as quickly as we can.

So in the past year, you've also announced 2 acquisitions geared towards accelerating growth in AWM. Should we expect you to continue to deploy some of the excess capital for inorganic? And if so, what areas are you most attracted to?

I'll say the same thing. I've said about this for a number of years. We would love to find interesting inorganic things that can accelerate the scale and the growth of our Asset and Wealth Management platform. I think we found a handful of things this past year, but I'd be the first to caveat that they were small, small but important because they filled some gaps. If there were other things that could accelerate that journey and continue to evolve the mix of the firm so that the scale of asset and wealth relative to Banking and Markets continue to shift, we would try to do that. However, to do significant things, the bar is going to be very high, and we're incredibly focused on the culture of the firm and the way the firm operates culturally. And we will be extremely cautious in doing anything that we think can offset kind of the cultural ethos of the way the firm operates. The best, most attractive things generally are not for sale. And the best, most attractive things, if they are for sale, aren't for sale at times when you can buy them. And so a lot of this is deciding what looks really interesting and taking a very long-term view and then seeing if opportunities pop up. I know as a reference, and I'll make it a reference, James Gorman wanted to buy E*TRADE for over a decade, and then there was an opportunity where Morgan Stanley could. That's as a CEO kind of strategically thinking, things pop up. And you've got to have a clear lens as to what's additive, what's not. So when things pop up, you have an ability to decide whether or not it fits and it's right for you. And so if you look -- they're small, but if you look at the 2 things we did last year, iVentures popped up, and we were very lucky because somebody approached iVentures, and we had a long relationship with iVentures. And so Hans Swildens, the owner of iVentures, came to Mike Brandmeyer of Goldman Sachs and said, somebody's come and wants to buy my business. And I like to think about it. Can you help me think about it? And Mike said, no, I can't help you think about that, but I'll help you think about selling it to Goldman Sachs. And so that wasn't on our radar screen, but that was something we would do last year. Innovator popped up because Bruce Bond decided they were going to sell the business. And so we knew we were looking for something that could accelerate our position in active ETFs. And so when we heard that was happening, we were ready. We had done work. We were ready to say this fits some of the things we want to try to do. So you never know what's going to pop up. You can take a long-term strategic view with some bigger things, but it's hard to buy the really good things. But if we could and it fit culturally, we'd certainly think about it, and it's a good place for capital to go if you're making the right decisions.

How real is the concept of having a narrow regulatory window to do strategic deals for you, particularly given that you're G-SIB and that you're Goldman Sachs?

I -- what I would say about that is we have a window at the moment where large financial institutions probably can do -- can do some things. The kinds of things we're talking about in Asset and Wealth Management, I don't think are things that in most environments, you wouldn't be able to do. I think there's a general point of view that a firm like Goldman Sachs doing more in asset and wealth management makes the institution more stable, more durable, and there's a regulatory lens that the regulators would like to see that. That's very different than a G-SIB buying a large regional bank. That's very different than G-SIB to G-SIB consolidation. Those are things that I think will always have regulatory headwinds. There might be some windows when you can and some windows when you can't. But the stuff we're focused on, generally speaking, the regulatory world says more asset and wealth management, more durability. Those are things that generally in most environments, I can't say in all most environments, you get support for that direction of travel.

So finally, we just have a few minutes. Maybe to close, David, you talked about Goldman Sachs as a growing company, not just a cyclically well-positioned company for 2026, but a growing company.

We're that, too.

Yes.

[indiscernible] well positioned and growing.

So both. That's a good Venn diagram for the stock price. So maybe a few closing remarks on sort of what you want investors to most take away about Goldman in '26 and beyond.

Well, I just -- I think people have its human nature to look through the rearview mirror. And all our experiences, everything that we see is shaped by what we've experienced, okay? And so when looking at our industry, it is human nature to look through the rearview mirror. And even though the rearview mirror has this thing that's 17 years back in the rearview mirror, it was such a thing that it shaped a lot of the lens. These institutions are just very, very different, and we're operating in a different world. There are enormous scale advantages for the large players in these businesses. And the durability of these businesses has evolved. That does not mean that there can't be environments where there are headwinds to earnings and earnings decline. If we had an economic recession, financial institutions would have headwinds to earnings. There'd also be some countercyclical things or some pro-cyclical things in that environment, too, that would balance some of that. But these businesses are diverse, durable and have an ability in a growing economy to grow more than historically, I think they've been credited with. And I think the earnings, which are significant, I think investors are coming around to a point of view that the historic multiples are too low based on the earnings durability of these businesses now. And I think there's an opportunity to continue to grow these franchises. The world is going to -- I'm in the camp, the world is going to grow. The United States is going to grow. Our firm, our business is definitely more correlated to the U.S. than the world, but we're correlated to growth in the world, too. And the opportunity set for us to deploy our services and our resources against our clients with that growth will allow us to continue to grow the firm. And if we grow the firm, we will grow earnings. And I just think we're well positioned to continue to do that on a relative basis, well, and so we're very focused on that. We understand our job is to grow earnings for shareholders. We're very focused on that. We're good, nimble deployers of capital. And I see lots of opportunities. And there'll be ups and downs, but I think the firm is just very well positioned in the things that we do to continue to grow and deliver for shareholders.

Well, David, that was an invigorating start to the day. So I appreciate the chat. Thank you for joining us.

Thank you for having me. Appreciate it.