GS Q2 Earnings What We Learned

With ~80% of S&P market cap behind us, some notable highlights:

• One of the best beat rates on record was met with muted EPS rewards (long and short). The median beat earned just +20bps vs the S&P (+95bps historically) vs a miss -118bps (vs -211bps). In the crowded names we monitored, crowded shorts squeezed while crowded longs underwhelmed (+40bps vs +26bps).

• Earning growth has been unbelievably strong: Q2 EPS +45% Y/Y (vs 22% est.), AI ROI started to show up, and Capex estimates rose modestly this quarter but >$1trn expected in 2027.

• EPS produced two of the largest single day market cap increases & decreases this period : MSFT +$550bn on 7/30, AAPL -$500bn on 7/31

• Beat rate remains one of the highest on record: 64% of companies are beating EPS by > 1 std of consensus estimates - well above the 49% avg.

• Sector theme - beat & fade in TMT: TMT beats lagged the S&P by -192bp on T+0 versus +75bps outperformance for non-TMT beats

• Market isn’t rewarding you in either direction. Median 1-day excess return vs. the S&P was +20bps for a beat (vs. +95bps historically) and -118bps for a miss (vs -211bps historically).

Crowding Reactions (desk views)

• We track T+0 performance for names flagged as crowded (longs 8+, shorts 3 or fewer).

• Across 204 names, the season-to-date equal weighted L/S spread is −14bps at a 53% hit rate - crowded shorts outperformed crowded longs (+0.40% vs. +0.26%).

• On a weekly basis, the crowded L/S pair returned +3.80% cumulatively - but Week 1 alone contributed +5.46%. Excluding it, the cumulative flips to −1.66%.