Many people are asking, will the profit margins of large companies be able to sustain themselves next year? This question is more complex than it seems.

From the fundamentals, the trajectory of profit margins directly determines the ceiling of earnings forecasts. Especially for the largest companies in the US, whether they can continue to maintain their currently exceptionally high profit margin levels has been a recurring debate on Wall Street. This year, the market has been closely watching the AI competition landscape among major corporations, and this topic is expected to continue fermenting through 2026.

The data is quite interesting—market consensus expects the median profit margin of S&P 500 component stocks to expand by 89 basis points next year. However, according to macro profit margin models, the actual situation might not be so optimistic, with moderate expansion in profit margins for mid-sized companies.

There is also a detail worth noting. Recent corporate survey feedback indicates that many companies are concerned about the relative speed of input costs and pricing inflation. Historical experience suggests that such signals often foreshadow downward pressure on profit margins. However, this round of survey data may have been influenced by tariff factors, and economists generally believe that this cost pressure will ease by next year.

The good news is that productivity growth is expected to accelerate significantly—partly driven by the practical application of AI technology. Meanwhile, the labor market is only expected to tighten slightly, which provides positive support for companies' cost control and profit margins.