Goldman Sachs CEO David Solomon on US Economy, AI Spending, M&A

U.S Economy & Market Outlook - U S economy is in good shape with strong tailwinds, but headwinds are causing underperformance; acceleration expected into 2026 [1][2] - Government fiscal stimulus and infrastructure spending are key tailwinds, balanced by trade policy implementation and geopolitical fragility [2][3][4] - Overall growth trajectory from December to December will likely be slightly below 2%, but an acceleration is expected into 2026 [4] - The upper end of the economy is spending strongly, while the lower end faces more constraints; labor softness and inflation need monitoring [6][7] - Markets run in cycles, and a drawdown in equity markets is possible in the next 12-24 months, but the potential of new technology is exciting [13][14][15] M&A and Strategic Priorities - Dealmaking is picking up, especially in the U S, driven by a changed regulatory environment; large cap M&A (companies $10 billion or larger) is up 100% year-over-year [16][18][19] - Goldman Sachs' priorities include serving clients, executing a strategic plan, and growing earnings by investing in investment banking/trading and asset/wealth management [21][22][23][24] - Goldman Sachs has increased its market share by approximately 350 basis points in the investment banking and trading business over the last five years [23] Technology & AI - AI is transforming the business of work, enabling people to be more productive and have better information [33][34] - AI allows for greater coding productivity and efficiency, and accelerates automation in operational systems [37][38] - Goldman Sachs has 12,000 engineers and is investing heavily in technology, including AI, to enhance productivity and growth [32][38] - While some jobs may be reduced, Goldman Sachs anticipates overall headcount to increase in 5-10 years due to firm growth enabled by technology [41][42] - There is complacency around risk-taking in the AI space, and a reset or drawdown is likely at some point [49][51] European Market - Europe needs to deploy more capital into the tech risk ecosystem to build globally significant tech businesses [26][27] - The European Union should operate more as an economic union to take advantage of its population and encourage innovation [29] - The European Commission should capture the urgency of capital deployment, encourage risk-taking, and consolidate the banking and exchange systems [30][31]