‘Golden age of profit margins’ seen in 2026
Wall Street tends to be a pretty optimistic place. But on one measure, market watchers are the most optimistic on record.
FactSet data shows the consensus estimate for S&P 500 net profit margins in calendar year 2026 calls for the gauge to climb to 13.9% in 2026.
But if borne out by events next year “it will mark the highest (annual) net profit margin reported by the index since FactSet began tracking this metric in 2008,” wrote John Butters, senior earnings analyst at the financial data company.
A recent story from Barron’s also commented on the expectations for especially fat profit margins embedded into forecasts for next year.
“We are in the golden age of margins,” RBC’s Capital Markets’ head of US equity strategy, Lori Calvasina, told the magazine.
That’s good news for investors looking forward to next year. But the follow up question, of course, is where the growth in profitability is expected to come from. The answer, as you might have guessed, is tech. Though the precise mechanisms by which those profits land in the coffers of the giant tech firms remains something of a mystery. Barron’s doesn’t get into the details, saying “call it benefits from AI, pricing power, or whatever.”
That doesn’t exactly sound like money in the bank. But even die-hard haters of AI have to acknowledge that betting against the ability of giant tech companies to generate massive profit growth has been a bad trade for the last couple decades.
But if borne out by events next year “it will mark the highest (annual) net profit margin reported by the index since FactSet began tracking this metric in 2008,” wrote John Butters, senior earnings analyst at the financial data company.
A recent story from Barron’s also commented on the expectations for especially fat profit margins embedded into forecasts for next year.
“We are in the golden age of margins,” RBC’s Capital Markets’ head of US equity strategy, Lori Calvasina, told the magazine.
That’s good news for investors looking forward to next year. But the follow up question, of course, is where the growth in profitability is expected to come from. The answer, as you might have guessed, is tech. Though the precise mechanisms by which those profits land in the coffers of the giant tech firms remains something of a mystery. Barron’s doesn’t get into the details, saying “call it benefits from AI, pricing power, or whatever.”
That doesn’t exactly sound like money in the bank. But even die-hard haters of AI have to acknowledge that betting against the ability of giant tech companies to generate massive profit growth has been a bad trade for the last couple decades.