David Solomon - Italian Tech Week 2025

Well, first, thank you for having me here. Delighted to be here. The US economy is in pretty good shape and there are some very, very strong tailwinds that have really had a profound effect and there are also some things going on that are creating headwinds and are probably leading the economy to underperform its expectation at this time. But I'm optimistic that we're probably going to see an acceleration as we continue to head into 2026. The big structural issue that's kept the US economy going so well is the US and by the way other developed economies around the world are running very aggressive fiscal stimulus plays. Governments are spending enormously into economies in the developed world and that keeps the economy going even when you have other headwinds. Second big macro phenomenon that's affecting the US economy is all of the AI infrastructure build, all the capital spending, all that's going into the ground to support the deployment, the development, the continued growth of AI infrastructure into the enterprise. And that's a big tailwind too. That's balanced on the other side by the implementation of the trade policies which are still getting absorbed. I think we're seeing some of the effects from trade, but there's still more to go in terms of really understanding how the trade policy is fully implemented and how it balances growth. And then obviously the world's a little bit more geopolitically fragile and that has an impact on growth and confidence. But when you balance it all, you saw the third quarter reading was quite strong. But year-over-year from last December to this December, the overall growth trajectory will probably be a little bit less than 2%. And so that's slightly below trend, but still in pretty good shape.

I think that as the trade policies are absorbed and you have the continued stimulus and the continued kind of tech spend, you've got a pretty good tailwind. You know, I hear as I talk to CEOs that would kind of have their finger on the pulse, certainly the upper end of the economy still spending quite strongly, a little bit more constraint on the downside on the lower part of the economy. But I think the things you have to watch, you have to watch labor. There's no question labor is a little bit softer. The Fed's watching labor carefully. And you know, I think you've also got to watch inflation and whether or not the impact of trade is just a one-time price movement or there's something more significant that comes through and it's too early to know.

It's a little bit softer. And I think you can step back and you can understand why when you think about big enterprises and what's going on with technology, people are pausing hiring to really kind of evaluate how as they bring this technology into the enterprise, they can automate, create efficiencies, reinvest. And so, you know, I think at the moment that's slowed hiring and as a result, the labor numbers are a little bit softer.

I think it's in the distribution of outcomes. You know, I think we'll have to watch. I know there's a great parlor game of people kind of predicting what the world's going to look like six months, 12 months out. If you think about what the world looked like in April and where markets were in April and think about where they are today, I'd just be cautious. I think that we've got competing forces between labor and inflation and how they balance, which is still a little bit uncertain, will have an impact on whether we get one more cut or we get two or three more cuts.

Am I comfortable? You know, yes, I sleep very well. I'm not going to bed every night worrying about what will happen next. But markets run in cycles. And whenever we've historically had a significant acceleration in a new technology that creates a lot of capital formation and therefore lots of interesting new companies around it, you generally see the market run ahead of the potential because there are going to be winners and losers. If you go back and you think about the internet, pick on Amazon. Amazon was one of many companies that was prosecuting that kind of opportunity. Many of the companies went away. Amazon became an incredible company. You're going to see a similar phenomenon here. I wouldn't be surprised if in the next 12 to 24 months we see a draw down with respect to equity markets, but that shouldn't be surprising given the run we've had. But generally speaking, I think what's super exciting is the technology is expanding, new companies are being formed, and the potential of this technology deployed into the enterprise can be very, very powerful. And so it's an exciting time and the market looks forward.

The pickup in deal making broadly is meaningful, but it's particularly accelerated in the US. And what's driving the pickup in deal making is a changed regulatory environment. So if you were thinking strategically and you wanted to really expand your scale or your competitive position in almost any industry for the last four years in the United States, the answer was no. From a regulatory perspective, it really wasn't what's the question. What could the answer be? The answer was no. And I think CEOs at this point imagine they're in an environment where you actually can get strategic transactions done to expand your competitive position. And so we obviously inside Goldman Sachs, we have an early look at that activity and those dialogues. And I would say it's accelerated very significantly. If you just look at the facts in terms of what's public, we've obviously had a very significant M&A quarter. We had a $1 trillion M&A volume quarter this past quarter. And if you look at large cap M&A, meaning M&A for companies that are 10 billion dollars or larger, it's up 100% year-over-year. So there is real momentum in the dealmaking environment. I think you're going to see an acceleration of that into 26 for sure. And increasingly CEOs are testing what the bounds are of their ability to enhance their competitive position or improve their scale and their lead where they have a leading position in a variety of industries. And I think the regulatory environment is going to permit that at the moment.

Well, we don't really think about it next year. Our priorities always start with the way we face and serve our clients. But in 2019, 2020, we laid a strategic plan out for the firm and we've been executing against it for the last six or seven years. And as you highlighted earlier in the discussion, we've created a lot of value because we've grown the firm. At the end of the day, as a public company, we have to grow. We might be a big mature public company, but we have to grow. We have to grow our earnings and to do that you have to have a cogent plan where you're investing in different parts of the business. We have two big principal businesses: our investment banking and trading business where I think there's little debate about our leadership position. It's an extraordinary business, very big business. We've been investing and adding more resources to that business over the last five, six years. We've increased our market shares very meaningfully in that business. Our market shares are up about 350 basis points over the last five years in that business. And then separately we have the fifth or sixth, seventh depending on how you look at it, largest active asset manager in the world. We manage about 3.3, 3.4 trillion dollars through our asset and wealth management platform. That business is growing high single digits is what we've put out publicly. It's actually been growing faster than that. And we continue to invest in a variety of aspects of that business where we see real growth. We can grow our wealth business which is an ultra high net worth wealth business. We can continue to grow our alternatives platforms, private capital formation and we have a very flexible solutions business where really for big institutional capital allocators, we have an ability to really create and customize what they need from an investment perspective.