Corporate earnings strength broadens beyond mega-cap tech as net margins reach all-time highs, bolstering equity valuations.
S&P 500 companies reported a blended net profit margin of 16.9% for the second quarter, the highest since tracking began in 2009. The figure surpasses the prior quarter’s 14.8% and last year’s 12.9%, exceeding the five-year average of 12.4%.
Alphabet and Amazon drove gains, with Alphabet posting a 34% operating margin and $98 billion in other income from unrealized equity gains. Amazon’s operating margin rose to 13.7%, supported by $53.4 billion in net other income tied to its Anthropic investment. Excluding these two, the index still achieved a record 15% margin.
Sector-level improvements suggest sustained earnings resilience, reinforcing the equity rally’s fundamental support.