S&P 500 companies are on track to post a 15.7% net profit margin for the second quarter of 2026, the highest reading since the data series began in 2009. If the figure holds once every company has reported, it would mark the tenth consecutive quarter of rising margins. So far, 27% of S&P 500 companies have posted second-quarter results, and among them 86% beat earnings-per-share estimates while 80% beat revenue estimates.
Alphabet, Google's parent company, is the single biggest contributor to the margin gain after beating earnings forecasts by a wide margin. The Kobeissi Letter, which tracks the data, summed up the broader pattern as AI driving historic earnings growth. Net profit margin is what's left of revenue after every cost is subtracted, including cost of goods, wages, interest and taxes. A rising margin means a company is keeping more out of every dollar it brings in, even if revenue itself doesn't grow as fast. Read next to a card Stacks covered earlier, though, the picture gets more complicated. That card tracked labor's share of national income falling to a record low. Corporate margins climbing to a record high while labor's cut of the pie shrinks are two sides of the same coin: part of this margin expansion comes from new AI-driven revenue, and part of it comes from how hard companies have squeezed costs, including labor costs. One caveat matters here. The 15.7% figure reflects only 27% of S&P 500 companies that have reported so far. The rest, including Microsoft, Meta, Apple and Amazon, which report this week, still need to weigh in before the number is final. It could hold, or it could come down.
Why it matters · A record profit margin sounds unambiguously bullish, but it's showing up at the same time labor's share of income is at a record low, meaning part of this earnings boom is coming out of workers' pockets, not just AI productivity.
Worth asking · Is this record profit margin a durable AI productivity gain, or partly a squeeze on labor's share of the pie?