Goldman Sachs Cuts IPO Outlook With a $160 Billion Caveat

We’ve raised the flag on the pronounced and potentially overly exuberant market move of late, the same one that landed the S&P 500 and the Nasdaq Composite in overbought conditions with Friday’s market close.

As you know, that led us to increase our cash position in the last few weeks, and maintain the Portfolio’s market-hedging, inverse ETF holdings. What we discussed on Monday morning regarding pressures on consumer companies and printed circuit board prices added another layer of support for that decision as the Q1 2026 earnings season heats up.

It seems we are not the only ones taking a more cautious approach. Goldman Sachs (GS) has dialed back its expectations for the IPO market this year, now seeing around 100 such transactions. That’s a 17% reduction from the $12 deals it called for earlier this year, but what’s interesting is the deal value of roughly $160 billion was unchanged.

Goldman’s thinking is that equity market volatility and geopolitical uncertainty could temper expectations for the new issue market. Hard to argue against that “potential” scenario, but that’s also why we track not only IPO filings but roadshow dates and price talk for IPOs.

What’s likely more on point is that roughly 20% of the IPO backlog since 2025 is related to software companies. And we’re not unfamiliar with the pressure software companies have been under amid AI-related questions and more recently claims that the U.S.-Iran conflict led to delays in the Middle East. ServiceNow (NOW) noted that delayed closings of large on-premise deals in the Middle East due to regional conflict caused roughly a 75-basis-point headwind to their total subscription revenue growth in Q1 2026.

But, when it comes to investment banking fees, they are based not on the number of transactions, but on the volume of capital raised, and that hinges on deal size. That means that, while we monitor the number of IPOs coming to market, we will also need to be mindful of their deal size and whether highly anticipated offerings are upsized or downsized.

Let’s also remember that, while IPOs tend to get the spotlight, there are other drivers of investment banking fees, such as M&A transactions, advisory services and the like. It’s also quite possible that some of the potentially postponed or shelved software IPOs could become M&A transactions. When the stock market is at or near all-time highs, shares are currency, and eventually private equity (PE) shops need to monetize their investments. That’s especially true if they are intent on raising another PE fund and need to show a track record.

For us and the Portfolio’s positions in Morgan Stanley (MS) , Bank of America (BAC) and SuRo Capital (SSSS) , we’ll continue to follow the IPO market closely and adjust our thinking based on what we see.

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At the time of publication, TheStreet Pro Portfolio was long BAC, MS and SSSS shares.