Bank Earnings Are As Cold As Ice – Part 2

Goldman Sachs, Morgan Stanley, Bank of America & ASML: When Growth Turns Cold

“You’re as cold as ice… you never take advice. Someday you’ll pay the price. I know.”

Wall Street just wrapped up the Big Bank Q2 earnings—and like the hit song from Foreigner, it sounds catchy on the surface but plays with a bitter aftertaste. The illusion of growth is still being sold at a premium, but the cracks underneath are widening.

We’re in a slow-motion freeze—dressed up in trading profits, adjusted metrics, and AI hype.

This week’s earnings from Goldman Sachs, Morgan Stanley, and Bank of America suggest that even the strongest institutions are relying more on momentum than on money. And for those still hanging their hopes on the AI “revolution,” the shock came early—ASML, the backbone of Nvidia’s chip supply chain, just issued a warning that should send a chill down the spine of every growth investor.

ASML: AI Turns Cold

“It happens all the time… you’re closing the door…”

If Nvidia is the face of the AI bubble, ASML is the spine. You can’t build cutting-edge AI chips without its extreme ultraviolet (EUV) lithography systems (which ASML is the only maker). But instead of delivering blowout results, ASML delivered something else: a reality check.

Net bookings fell -0.5% year-over-year. The sale of new EUV systems—the very equipment that powers next-gen chips—dropped -25% YoY. And management didn’t sugarcoat it: revenue is expected to decline -15% YoY in the second half of the year. Not even flat. Negative.

This isn’t what an AI revolution looks like.

It’s what the back end of a demand spike looks like—where orders slow, backlogs dry up, and expectations collide with the real economy.

But here’s the real red flag:

Despite reporting billions in net income, ASMLonly converted 25% of its profit into cash flow, down from 39% a year ago. That shortfall came from ballooning receivables and inventories—which means sales were booked, but the money hasn’t shown up. Finance receivables are also swelling, meaning customers are increasingly being floated credit.

That’s not strength. That’s a revenue mirage. And yet?

The stock still trades at over 31x earnings—as if growth is guaranteed.

“You’re willing to sacrifice our returns…”

This is not a company riding a wave.

It’s a company thats already gone cold. The stock fell -11% today as investors don’t want to wait around for the ice.

Goldman Sachs: The Mirage of Growth

Goldman Sachs put on its poker face this quarter, flashing a huge $10.91 EPS number. But once again, it’s not the hand they’re playing—it’s the trick they’re hiding.

The profit surge came largely from trading (stocks) desks. Equities trading jumped 36%, and fixed income rose 9%. That’s great… if you’re running a hedge fund. But for a bank? That’s not sustainable, repeatable, or stable.

Real businesses—wealth management, lending, consumer banking—showed little to no growth.

Goldman’s Platform Solutions, its foray into consumer and business lending, remains stuck below $700M in revenue. Wealth and asset management were flat, with private equity gains evaporating.

NII growth? A mirage. It ticked up, but only because funding cost dropped—not because of actual loan expansion.

Yet despite this dependence on volatile trading income, Goldman trades at ~17x trailing earnings—a multiple usually reserved for companies with organic growth (as well as one of the most expensive Wall Street bank stocks). The stock is trading lower today down about -1%.

“Someday you’ll pay the price. I know.”

And in a market where liquidity can flip overnight, those earnings vanish faster than the next risk-off headline.

🔒 [PAID SUBSCRIBERS ONLY BEYOND THIS POINT]

To unlock the FULL forensic accounting, valuation resets, and our next portfolio plays—Join The Coastal Journal Full Access Team.

→ $10/month or $100/year

Bank of America – Liquidity Thinning, Margins Shrinking