Goldman Sachs is deploying AI in-house and preparing for financing opportunities in AI development in the market. 

Developing AI technology requires “infrastructure, power, and all these things require financing to drive scale that’s going to be necessary for people to execute on the investments that they see as important to keep their businesses competitive at pace,” Chief Executive David Solomon said during the bank’s first-quarter earnings call today. “That is creating an ecosystem of activity in our investment banking and markets business.”

Goldman Sachs’ clients will want to scale with AI, Solomon said, noting that “there’s a very constructive opportunity set for us.” 

The $521 billion institution is also eyeing financing opportunities for AI companies “which will be a tailwind to our business,” Solomon said. 

The bank will benefit from AI-driven deal-making, investing and taking companies public, he said. 

THE BIG PICTURE: Similar to Citi, JPMorgan and Wells Fargo, “We are focused on enhancing productivity, particularly for our developers, and increasing operating efficiency,” Solomon said. 

New York-based Goldman is most focused on using AI to “scale our smartest people to do more with our clients,” he said. 

As Goldman looks to increase efficiencies, it will be mindful of talent acquisition and retention, an April 3 Bank of America Securities report stated. 

Goldman’s approach of “maintaining pay-for-performance orientation in 2024” or paying employees based on performance will help the bank reduce costs and drive efficiencies, the report stated. 

In Q1, Goldman reported an efficiency ratio of 60.9% compared with 68.7% a year ago, according to the bank’s earnings report. 

As Goldman looks to develop AI for efficiency and productivity, the company’s communication and technology spend increased by 1% year over year to $470 million, according to the earnings report.  

BY THE NUMBERS: In Q1, Goldman reported: 

• Net revenue of $14.2 billion, up 16% YoY; 
• Net interest income of $1.6 billion, down 10% YoY; and 
• Headcount of 44,400, down 2% YoY. 

FUTURE LOOK: Goldman is preparing for a potential hike in merger and acquisition activity this year, Solomon said.  

“We expect solid levels of debt underwriting activity to continue this year … alongside higher M&A activity,” he said. “I do think the pace is going to pick up in the coming quarters.” 

The bank aims to increase its private credit balance sheet from $130 billion to $500 billion in the next five years to capitalize on M&A activities, Solomon said.

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