Goldman Sachs signals job cuts and hiring slowdown amid AI push

Goldman Sachs has reportedly informed its employees of potential job cuts and a hiring slowdown through the end of the year, according to an internal memo cited by Reuters.

The Wall Street giant is preparing to leverage artificial intelligence (AI) to significantly boost internal productivity.

The internal memorandum, signed by CEO David Solomon, President John Waldron, and CFO Denis Coleman, outlines the firm's strategic AI push, dubbed "OneGS 3.0".

The memo highlights several critical areas targeted for AI enhancement such as client management and operation.

The leadership team expressed confidence in the move, stating: "The rapidly accelerating advancements in AI can unlock significant productivity gains for us, and we are confident we can re-invest those gains to continue delivering world-class solutions for our clients."

The anticipated job cuts follow a period of major internal shifts at the firm. This year, Goldman Sachs pulled forward its annual staffing reductions to the second quarter, rather than the usual September timeline. This exercise typically aims for a headcount reduction of 3% to 5% based on performance.

The firm also implemented significant leadership changes this year, introducing co-heads across its major divisions and adding six new members to its management committee. It also established a new financing division.

This consolidation and focus on AI suggest a strategic push by Goldman Sachs to streamline operations and dedicate resources towards technology-driven efficiency.

Strong Quarter Results

Goldman Sachs surpassed Wall Street expectations for its third-quarter profit on Tuesday, driven primarily by a surge in its investment banking division and increased revenue from managing client assets in rallying markets.

The firm's advisory business proved exceptionally strong, fuelling the impressive results.

Its investment banking fees surged by 42% year-on-year to reach $2.66 billion for the quarter ended 30th September.

The growth was largely fuelled by a 60% surge in advisory fees, alongside increases in both debt and equity underwriting fees.

Goldman Sachs posted an overall quarterly profit of $4.1 billion, translating to $12.25 per share. This comfortably exceeded Wall Street's consensus expectation of $11 per share.

A Goldman executive revealed the firm has advised on $1 trillion in announced mergers and acquisitions (M&A) year-to-date, outpacing its nearest competitor by $220 billion. Notable deals this year include - advising Electronic Arts on its $55 billion sale to a consortium including private equity firms and Saudi Arabia’s Public Investment Fund.

Advising Holcim on the $26 billion spin-off of its North American business, Amrize. Advising Fifth Third Bancorp on its $10.9 billion agreement to acquire regional lender Comerica, a deal set to create the ninth-largest US bank.

"This quarter's results reflect the strength of our client franchise and focus on executing our strategic priorities in an improved market environment," CEO David Solomon said in a statement.

"We know that conditions can change quickly and so we remain focused on strong risk management," he said.

Chief Financial Officer Denis Coleman highlighted the firm’s strength, noting that the quarter-end deals backlog is currently at its highest level in three years.