Is Goldman Sachs a Better Buy After Earnings Than Wall Street Thinks?

SpaceX plans to go public next month in what is expected to be the largest IPO ever, with Goldman Sachs as lead underwriter. Goldman posted strong Q1 results, with equity underwriting revenue up 45% year over year to $535 million and advisory revenue up 89% to $1.5 billion, while management described a very full pipeline and expects investment banking activity to accelerate. The article is constructive for Goldman Sachs and signals a broader rebound in IPO and M&A activity.

Analysis

The key second-order read-through is not just stronger GS fee pools, but a broader re-rating of the late-stage private ecosystem. A credible path to mega-IPO reopening improves pricing power for private growth, secondary blocks, and pre-IPO lenders, while forcing public-market allocators to re-underwrite “quality duration” names that have been structurally starved of supply. If this pipeline converts, the beneficiaries are the whole capital-markets stack: exchanges, market-makers, prime brokers, and select asset managers with IPO allocation franchises.

For GS specifically, the market may still be underappreciating operating leverage because underwriting and advisory are high-fixed-cost businesses: incremental deal activity can drop through at a much higher margin than consensus models imply. The risk is timing mismatch—headlines around a single marquee listing can temporarily mask that most bank earnings revisions come from a steady cadence of mid-market M&A and follow-on issuance, not one-off trophy deals. The better signal is whether backlog conversion stays elevated for multiple quarters; that is what would justify a sustained multiple expansion rather than a one-quarter earnings pop.

The contrarian point is that an IPO reopening can become its own headwind if supply is too large and too concentrated in a few crowded sectors, especially high-duration growth and AI-adjacent names. That can pressure secondary valuations, tighten LP liquidity, and eventually slow sponsor distribution velocity if aftermarket performance weakens. In other words, the near-term winners are capital-markets intermediaries, but the medium-term risk is that too much new supply cools the very equity tape that enabled the reopening.

Key Decisions for Investors

• Long GS vs. XLF for the next 1-3 months: express the view that firm-specific deal leverage will outpace the sector as underwriting/M&A backlog converts; target ~8-12% upside relative to the ETF if activity data stays firm.
• Add a basket long of exchange/market-structure beneficiaries (ICE, NDAQ) over 3-6 months: a stronger IPO calendar lifts listing, trading, and data revenues with less balance-sheet risk than banks.
• Buy GS call spreads 2-4 months out into any pullback: preferred over stock because the market may still discount fee revenue durability; structure for 2:1+ payoff if capital-markets momentum persists into the next earnings season.
• Pair long GS / short a high-duration growth basket over 1-2 months: if IPO supply accelerates faster than demand, new issuance can compress multiples in the most crowded private-to-public transition names.
• Watch for weakening aftermarket performance in the first few large IPOs; if deals trade down >10% within 30 days, reduce risk in the capital-markets long because that would signal supply is starting to overwhelm liquidity.