Goldman Sachs makes money by being in the middle of financial activity. When a company wants to merge with another company, Goldman Sachs advises on the deal and collects a fee. When a company wants to sell shares to the public, Goldman Sachs helps set it up and takes a cut. When big investors want to trade bonds, currencies, or stocks, Goldman Sachs stands ready to be their trading partner, earning a small profit on each transaction. On top of that, Goldman Sachs manages money for wealthy individuals and large institutions, charging fees based on how much money it looks after. These four streams, advisory fees, underwriting fees, trading revenue, and asset management fees, all rise and fall together with the mood of global financial markets. The diagram below traces where the money goes.
How Goldman Sachs Makes Money
flowchart TD
A["Institutional Clients
Corporations, Governments"] --> B["Investment Banking
Advisory & Underwriting"]
A --> C["FICC Trading
Bonds, Currencies, Commodities"]
A --> D["Equities Trading
Stocks, Derivatives, ETFs"]
B -->|"$41.5B revenue"| E["Global Banking & Markets"]
C --> E
D --> E
E --> F["Client Capital & Risk
Positions Held"]
F -->|"Market-making inventory"| C
F -->|"Hedging, financing"| D
G["Individual & Institutional
Wealth Clients"] --> H["Asset Management
Funds, Accounts"]
G --> I["Private Banking
Deposits, Loans"]
H -->|"$16.7B revenue"| J["Asset & Wealth Management"]
I --> J
J --> K["Invested Capital
Equity, Credit, Real Estate"]
K -->|"Returns, performance fees"| J
E --> L["Net Income
Fees & Trading Profits"]
J --> L
L -->|"Reinvestment"| F
L -->|"Reinvestment"| K
Five years of financial data tell a story of sharp peaks, a rough patch, and a recovery that has nearly returned the company to its best-ever level. Revenue hit $59.3 billion in 2021, then fell to $47.4 billion in 2022 and $46.3 billion in 2023 as markets cooled and deal activity dried up. The rebound has been real: revenue climbed to $53.5 billion in 2024 and reached $58.3 billion in 2025, just shy of that 2021 peak. Net earnings followed a similar arc, recovering to $17.18 billion in 2025 from a much weaker $8.52 billion in 2023.
Net Revenue 2021 to 2025 ($ billions)
Revenue dropped sharply after the 2021 peak, then recovered almost all of that ground by 2025.
The revenue recovery looks encouraging. But underneath it, the cash flow numbers tell a more complicated story. In 2021 and 2022, the business generated positive operating cash flow of $6.3 billion and $8.7 billion respectively. From 2023 onward, operating cash flow turned sharply negative, running at negative $12.6 billion in 2023, negative $13.2 billion in 2024, and a striking negative $45.2 billion in 2025. For a bank and trading firm, large swings in operating cash flow can reflect changes in trading positions and balance sheet activity rather than a collapse in the underlying business. But the scale of the 2025 figure is notable and warrants attention.
$17.2B
Net earnings in 2025, the highest in the five-year window shown and up from $8.5B in 2023
One important strategic shift shaped the recent numbers. Goldman Sachs spent years trying to build a consumer business, issuing credit cards under partnerships with Apple and General Motors. That experiment is now being wound down. The GM credit card program was sold to another issuer during 2025. In December 2025, Goldman Sachs agreed to hand the Apple Card program to another issuer as well, a transition expected to take roughly 24 months. Exiting Apple Card triggered $2.26 billion in markdowns on the credit card loan portfolio in 2025, which dragged on reported revenues. A related reserve release of $2.48 billion partially offset that in the credit loss line.
2025
milestone
Consumer Exit: Apple Card Transfer Agreed
Goldman Sachs agreed in December 2025 to transfer the Apple Card program to another issuer, capping a multi-year retreat from consumer banking. The GM credit card was already sold during 2025. This narrows the firm back toward its core: institutional trading, investment banking, and wealth management for high-net-worth clients.
Goldman Sachs returned $16.78 billion to shareholders in 2025 alone, through $12.36 billion in share repurchases and $4.42 billion in dividends. That is a large number relative to reported earnings of $17.18 billion, meaning almost everything earned went back to shareholders. The company's target is to deliver a return on equity between 14% and 16% through a full market cycle. In 2025, return on equity came in at 15.0%, sitting right in the middle of that target range.
$16.8B
Capital returned to shareholders in 2025, nearly matching the full year's net earnings of $17.2B
What Is a Credit Rating Downgrade?
A credit rating is like a grade for how reliably a company pays back what it borrows. Rating agencies grade companies from very safe to very risky. If Goldman Sachs gets downgraded even one notch, trading partners can legally demand more cash as collateral on existing deals. The firm's own filings say a single-notch downgrade could trigger $224 million in immediate additional collateral demands.
The risk picture at Goldman Sachs is driven by three connected vulnerabilities. First, the business depends on being able to borrow money cheaply and quickly. If credit markets freeze or the firm's credit rating drops, borrowing costs rise fast. Second, Goldman Sachs holds large positions in bonds, loans, stocks, and other assets as part of its trading operations. When asset prices fall sharply, those positions lose value directly, and the fees Goldman Sachs earns on managed assets also shrink because they are based on a percentage of what clients have invested. Third, the firm has concentrated exposure to specific trading partners, borrowers, and regions including the European Union. If a major counterparty defaults, losses can be material.
What Is a Counterparty?
When Goldman Sachs makes a trade, there is always someone on the other side of the deal. That other party is called a counterparty. If that counterparty cannot pay what it owes, because it goes bankrupt or runs out of money, Goldman Sachs absorbs the loss. The more concentrated the firm's exposure to a small number of counterparties, the bigger the potential hit from a single default.
Technology risk is also rising. Goldman Sachs depends on complex computer systems to process enormous volumes of trades every day. The firm's own filings point to widespread technology outages in October 2025 and July 2024 as evidence of how exposed large financial firms are to failures at cloud service providers and other technology vendors. A significant outage at a key vendor could halt trading and damage client relationships.
$224M
Additional collateral that could be demanded from trading partners following a single credit rating downgrade
Goldman Sachs has 47,400 employees spread across offices in more than 35 countries, and those employees speak more than 175 languages. The average tenure of the firm's most senior management group is approximately 23 years, which is unusual in an industry where people move between firms frequently.
The Bet
Goldman Sachs earns most of its money when markets are active: when companies are merging, when stocks are being sold to the public, when trading volumes are high, and when asset prices are rising. The implicit assumption in the current financial trajectory is that the strong market environment of 2024 and 2025 continues, or at least does not reverse sharply. If deal activity slows again, as it did in 2022 and 2023, revenues will compress quickly because the cost base does not shrink at the same speed. The retreat from consumer banking narrows the firm back to its most cyclical businesses, which means there is less diversification to cushion a downturn if markets turn cold.
Open question
Goldman Sachs has nearly recovered its 2021 revenue peak, returned almost all of its 2025 earnings to shareholders, and exited the consumer banking experiment that weighed on results for several years. The firm's return on equity hit its target range in 2025 for the first time since 2021. But the business is now more concentrated in trading, advisory, and asset management than it has been in years, all of which are sensitive to market conditions that no one controls. If global deal activity and market volumes pulled back to 2023 levels again, would Goldman Sachs's cost structure and balance sheet hold up well enough to sustain its target return on equity, or does hitting that target require a level of market activity that cannot be counted on?
Compiled · 10-K · FY2025
Liquidity and Capital Access
Goldman Sachs depends on the ability to borrow money and sell assets quickly. If credit markets freeze or the company's credit rating drops, it could face huge costs to borrow money, lose access to funding entirely, or be forced to sell assets at steep losses. A one-notch credit rating downgrade could trigger $224 million in additional collateral demands from trading partners.
Asset Values and Market-Making
When asset prices drop, Goldman Sachs loses money directly because it holds large positions in bonds, loans, stocks and other investments. The company also earns fees based on how much money clients have invested, so falling asset values reduce those fees. Sudden market declines can make assets impossible to sell or force sales at huge discounts.
Credit Concentration Risk
Goldman Sachs has concentrated exposure to specific counterparties, borrowers and geographic regions including the European Union. If a major trading partner, borrower or country defaults or gets downgraded, Goldman Sachs could suffer material losses. Concentration has increased because of regulatory changes that centralized clearing through particular exchanges and clearing houses.
Subsidiary Restrictions and Intercompany Funding
Goldman Sachs Group relies on cash and loans from subsidiaries to pay dividends and debt. However, bank and broker-dealer subsidiaries face strict regulatory limits on how much money they can send to the parent company. These restrictions could prevent the parent company from meeting its financial obligations, including debt payments.
Operational Systems and Third-Party Failures
Goldman Sachs depends on complex computer systems to process enormous volumes of trades and handle client information. Outages at the company, its cloud service providers, or critical financial intermediaries like clearinghouses could halt trading, cause losses and damage reputation. Recent widespread technology outages in October 2025 and July 2024 show how vulnerable the firm is to vendor failures.
10-K Item 1A · Risk Factors
