MW S&P 500 profits haven't been this rich in at least 15 years - but there's more to the story
By Bill Peters
Three Big Tech companies have had an outsize impact on Q1 profit performance
Amazon's net income was up 77% in the first quarter.
Big Tech is carrying the weight for the S&P 500 once more - helping drive the index toward its best profit-margin performance more than 15 years, while consumer-oriented companies grapple with the impacts of the Iran war.
A few large technology companies have been major contributors. And although businesses in the financial, industrial and utilities sectors have also played into that performance, the current trend obscures more subdued results elsewhere and underscores the ongoing performance gap within the index.
Even with S&P 500 SPX companies on track to put up bottom-line growth not seen in years, it still comes down, in large part, to three companies: Alphabet $(GOOG)$ $(GOOGL)$, Amazon.com (AMZN) and Meta Platforms (META).
As of Friday, first-quarter net profit margins for S&P 500 companies stood at 14.7%, according to a FactSet report that tracks both reported figures and estimates for companies that have yet to post results. If that figure sticks, it would be the highest since FactSet began tracking the metric in 2009. Seven S&P 500 sectors have seen their net profit margins rise.
Meanwhile, the per-share profit growth rate for the S&P 500 in the first quarter over the past week jumped to 27.1% from 15%, according to the FactSet report. A 27.1% clip, if it holds through the end of the quarter, would mark the biggest year-over-year gain for the index since the postpandemic reopening sparked a 32% jump in the fourth quarter of 2021.
Results from Alphabet, Amazon and Meta have been the biggest contributors to the latest gains, even as some investors say the profit figures don't tell the whole story in an era when artificial-intelligence spending is escalating so quickly. GAAP profits at Alphabet and Amazon also got a boost from paper gains related to equity stakes in hot AI startups.
Alphabet's net income rose 81% in the first quarter, Amazon's was up 77% in the period and Meta's was up 61%. Those rates of profit growth all vastly outpaced their respective rates of revenue growth.
Meanwhile, Seaport Research said the median S&P 500 company is expected to deliver 10.4% earnings-per-share growth for the first quarter. That's about half that of the index at large, which is weighted by market cap. This highlights how profit growth at large companies has an outsize impact that can obscure mixed trends elsewhere.
On earnings calls in recent weeks, seemingly every executive at a consumer-facing company has fielded at least one question about how business is holding up in the face of high gas prices. Management teams at household names like Starbucks $(SBUX)$ and Mattel $(MAT)$ have downplayed the impact of $4-plus gasoline prices over the past week. But Seaport's data show that profit margins have inched lower for both the consumer-discretionary and consumer-staples sectors.
More context on consumer spending will arrive when burger chain McDonald's $(MCD)$ and theme-park operator and media giant Walt Disney $(DIS)$ report results during the week ahead. In all, 126 S&P 500 companies are set to report this coming week, according to FactSet.
McDonald's in February said its value meals were bringing back customers, even as it stayed cautious on the year ahead. But some analysts said its lower-income shoppers have still been reluctant to dine out.
"Given their relative exposure to lower-income consumer in the U.S., which appears to be facing increasing macro headwinds, the setup skews slightly unfavorable heading into the print," RBC analyst Logan Reich said in a note last month.
-Bill Peters
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May 03, 2026 10:00 ET (14:00 GMT)
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