Corporate America is finding new ways to hold onto its money. According to CNBC, citing data from FactSet, the S&P 500’s blended net profit margin for the second quarter is running at 16.9%—the highest level since the data provider began tracking the metric in 2009. That’s up from 14.8% in the first quarter and 12.9% a year earlier, and it towers over the five-year average of 12.4%.
Net profit margin, the percentage of revenue a company gets to keep after paying all expenses, is a core driver of stock prices. Stronger margins mean more earnings per dollar of sales, which often justifies higher valuations and supports market rallies. The current numbers suggest that tailwind is still blowing.
Mega-cap muscle: Alphabet and Amazon lead the way
John Butters, senior earnings analyst and vice president at FactSet, pointed to Alphabet and Amazon as the biggest contributors to the record margin. Alphabet posted an operating margin of 34% in the second quarter, up from 32% a year earlier, and recorded a $98 billion gain in other income, primarily from unrealized gains on equity securities. Amazon reported other income of $53.4 billion on a net basis, largely tied to its investment in Anthropic, and its operating margin rose to 13.7% from 11.4% a year ago.
But this isn’t just a two-stock story. Even after stripping out Alphabet and Amazon, the S&P 500’s net margin still stands at 15%—also a record and the highest since 2009, according to FactSet data cited by CNBC.
Broad-based improvement across sectors
The strength is showing up across the market. Eight of the 11 S&P 500 sectors are reporting higher margins than they did a year ago, with technology, communication services, consumer discretionary, and energy leading the pack.
Adam Schickling, a senior economist at Vanguard, told CNBC that strong demand and operating leverage are helping companies convert more revenue into profit. “Businesses, when they’re busy, are more profitable,” Schickling said. “Firms are busier, they’re more efficient, and that translates into higher margins.”
Tech companies, in particular, have benefited from business models that can scale without proportionate cost increases. “Tech companies just have higher profit margins than what you might see from materials, industrials, energy,” Schickling noted. “That is a sector prone to having a higher general profit margin, especially because it has historically been relatively asset-light, which means they’re able to scale up at a very efficient rate.”
Risks on the horizon
Still, Schickling cautioned that competitive pressure in tech could pose a future risk to margins, as many new entrants crowd the space. The current record margins may not be sustainable indefinitely, but for now, they’re providing a solid foundation for the ongoing stock rally.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/13/these-charts-show-why-stocks-keep-rallying-profit-margins-are-highest-on-record.html
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