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GS Finance Corp., a subsidiary of The Goldman Sachs Group, Inc., has submitted a preliminary pricing supplement for a new series of leveraged basket-linked notes maturing on August 9, 2029, as disclosed on July 20, 2026. These notes track an equally weighted basket of eight technology and software companies, providing investors with 1.1 times participation in positive basket performance subject to a capped maximum payout. The structure features a 10% downside buffer, though investors remain exposed to substantial losses if the basket declines beyond 10% from initial levels.
Key Points
- NYSE: GS-PD — GS Finance Corp. filed preliminary pricing supplement on July 20, 2026
- Notes track eight leading technology stocks in an equally weighted basket offering 1.1x upside participation and a 10% downside protection buffer
- Anticipated trade date August 5, 2026; maturity on August 9, 2029; original issue price at 100% of face value with estimated market value between $890 and $920 per $1,000 face amount
- Maximum settlement capped at $1,850 per $1,000 face amount in positive scenarios; significant principal losses possible if basket falls more than 10%
Equally Weighted Technology Basket Concentration
The notes are based on an equally weighted basket of eight companies, each representing 12.50% of the basket with an initial weighted value of 12.5, according to the preliminary pricing supplement. The basket includes Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corporation, Oracle Corporation, and three additional securities not fully disclosed at this stage. This concentration in major technology and software firms exposes investors to sector-specific performance trends and the collective health of key cloud computing, artificial intelligence, and digital advertising businesses.
The equal weighting means each stock maintains identical weight throughout the note's term, setting the initial basket level at 100. Final settlement depends entirely on the collective performance of these eight stocks from the expected trade date of August 5, 2026, through the determination date of August 6, 2029. This three-year period aligns returns with medium-term technology sector dynamics, while individual stock volatility influences aggregate basket results.
Enhanced Upside Participation with Return Cap
These notes offer 1.1 times participation in positive basket returns, providing investors amplified exposure to gains beyond a one-to-one correlation with the basket’s movement. This leverage increases upside potential when the final basket level surpasses the initial level. However, total returns are capped at a maximum settlement amount of $1,850 per $1,000 face value, limiting profits regardless of basket performance. For a $1,000 face amount, maximum profit is capped at $850.
For example, if the basket appreciates 10%, investors would receive $1,100 plus the $1,000 principal (subject to the cap), totaling $1,100 per $1,000 invested. The 1.1x participation multiplier enhances sensitivity to positive basket movements compared to standard structured notes, but the cap restricts unlimited gains. This asymmetry balances the leveraged upside with capped returns, reflecting the embedded risk-return profile.
Downside Protection and Loss Exposure Beyond Buffer
The notes include a 10% downside buffer that shields investors against moderate basket declines. If the final basket level falls by up to 10% from the initial level, investors receive the full $1,000 face amount per $1,000 invested, preserving principal. This buffer provides protection during modest market corrections or sector-wide pullbacks and is a common risk mitigation feature in structured notes, reflecting Goldman Sachs’ credit and market risk pricing.
However, if the basket declines more than 10%, investors incur losses on the entire decline beyond the buffer. The return is calculated as the basket return plus 10%, meaning losses are dollar-for-dollar beyond the 10% buffer. For instance, a 20% basket decline results in a recovery of only $800 per $1,000 invested ($1,000 plus -10% times $1,000), representing a 20% principal loss. Larger declines lead to proportionally greater losses, exposing investors to significant capital impairment if the basket underperforms substantially over the three-year term.
Pricing, Valuation, and Secondary Market Details
The preliminary pricing supplement estimates the notes’ value between $890 and $920 per $1,000 face amount at pricing, reflecting a notable discount to the 100% original issue price. This valuation incorporates Goldman Sachs’ internal pricing models and credit spreads for GS Finance Corp. and its guarantor, The Goldman Sachs Group, Inc. The difference between issue price and estimated value represents embedded costs including underwriting margins, credit risk premiums, and leverage features.
Goldman Sachs & Co. LLC will initially transact notes at approximately the estimated valuation plus a declining additional amount from pricing through an unspecified date. Afterward, market-making prices will approximate current estimated values based on proprietary models. The disclosure notes Goldman Sachs is not obligated to maintain a market in these notes, and secondary market pricing will reflect updated credit spreads, implied volatility, and remaining time value of embedded basket options. Buyers of additional notes post-offering should expect pricing to vary from preliminary terms.
Issuer Guarantee and Credit Risk Profile
Issued by GS Finance Corp., the notes are fully and unconditionally guaranteed by The Goldman Sachs Group, Inc., providing investors recourse to Goldman Sachs’ balance sheet and credit quality if GS Finance Corp. defaults at maturity. This guarantee enhances credit quality compared to unguaranteed securities issued solely by GS Finance Corp., reflecting the consolidated strength of a leading global investment bank and financial services firm.
These notes are not bank deposits, are not FDIC insured, nor guaranteed by any bank or government agency, as stated in the preliminary pricing supplement. Despite the guarantee, investors bear counterparty credit risk of both issuer and guarantor. In case of financial distress at Goldman Sachs or systemic crises affecting major financial institutions, investors may face delays or impairment in returns at maturity or upon secondary market sales.
Issuance Program and Medium-Term Notes Structure
The notes are part of GS Finance Corp.’s Medium-Term Notes, Series F program, issued under the senior debt indenture dated October 10, 2008, as supplemented. The indenture appoints The Bank of New York Mellon as trustee and governs terms for GS Finance Corp. debt issuance. This framework enables issuance of varied note structures under one registration statement, with each offering governed by a prospectus supplement detailing terms, underlying baskets, and payment mechanisms. The Medium-Term Notes program offers Goldman Sachs flexibility to meet demand for structured note products.
Issued in book-entry form and represented by master note number 3 dated March 22, 2021, investors hold interests electronically via the Depository Trust Company system rather than physical certificates. This standardizes custody and trading for institutional and retail investors. The notes carry CUSIP 40054XSQ2 and ISIN US40054XSQ24 for identification and secondary market trading.
Key Dates and Trade Mechanics
The preliminary pricing supplement sets critical dates: expected trade date August 5, 2026, when initial prices of the eight basket stocks are fixed to establish the initial basket level of 100. The original issue date is expected August 10, 2026, with maturity on August 9, 2029, spanning approximately three years.
The determination date, August 6, 2029, occurs three days before maturity to finalize stock prices used in calculating the final basket level and settlement amount. This lag allows for calculation and settlement processing before final payment on maturity. Stock prices are measured from trade date through determination date, capturing full performance of the underlying technology stocks and ensuring timely investor payment.
Investor Risks and Potential Loss Scenarios
The preliminary supplement highlights that investors risk significant principal loss if the basket declines sharply. The 10% buffer protects only against modest declines; losses beyond this threshold are dollar-for-dollar. A total basket decline of 100% (all stocks falling to zero) would result in complete principal loss, while a 30% decline translates to a 20% principal loss after buffer exhaustion.
Moreover, gains in some basket stocks may be offset by losses in others, meaning strong performers can be negated by underperformers. This diversification effect works both ways: concentrated weakness in any subset of the eight stocks reduces overall basket returns. Investors sensitive to technology sector volatility or company-specific risks should carefully consider exposure to these large-cap tech firms. The 1.1x upside leverage amplifies gains but offers no downside protection, and the capped payout limits returns even in exceptional performance scenarios.
Valuation Discount and Secondary Market Liquidity
The estimated value range of $890 to $920 per $1,000 face amount reflects an 8% to 11% discount to the original issue price, representing the economic value to buyers at pricing. This includes embedded option costs, credit spreads, and underwriting margins. Buyers at 100% issue price pay above market value initially, benefiting the issuer and underwriter in the short term.
The preliminary supplement notes Goldman Sachs & Co. LLC may provide a secondary market but is not obligated to do so. Secondary pricing will fluctuate with underlying stock prices, implied volatility, time to maturity, and credit spreads. Investors seeking liquidity before maturity should expect bid-ask spreads reflecting the structured nature and limited secondary market depth of these basket-linked notes. Early sales may occur below estimated initial valuations.
