We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Corporate Profits Climb to Fresh Highs: ETFs in Focus
Read MoreHide Full Article
Key Takeaways
U.S. corporate profits hit record highs, reaching 12.4% of GDP in Q1 2026.
AI spending and efficiency gains continue to fuel earnings growth and margins.
EPS, EZM and EES offer exposure to fundamentally strong U.S. companies.
U.S. corporate profits continue to surge. Fresh data from the Commerce Department released last week showed total corporate profits reaching an annualized $4.42 trillion in the first quarter of 2026, up from $4.35 trillion in the previous quarter, as quoted on Yahoo Finance.
After-tax corporate profits accounted for 12.4% of U.S. GDP, marking the highest level since the second quarter of 2021, when earnings peaked as the economy emerged from the COVID-19 pandemic, the same article revealed.
Measured against gross domestic income (GDI), which captures the total income earned by households and businesses, corporate profits represented 12.2% — the strongest level since the early 1950s.
Profit Margins Remain Historically Elevated
The latest figures underscore a long-running shift in the U.S. economy. From 1950 through 2010, corporate profits as a share of GDP generally remained below 10%. Over the past 16 years, however, margins have consistently exceeded that threshold, dipping only briefly during the initial stages of the pandemic.
AI and Efficiency Gains Drive Earnings Growth
Artificial intelligence and related infrastructure investments have emerged as major catalysts for the current profit boom. Massive spending on data centers and computing capacity is creating what Barclays describes as a "structural tailwind" for the broader economy, as mentioned in the above-mentioned article.
Earnings Season Highlights Corporate Strength
The robust profit environment was evident during the latest earnings season. Companies not only comfortably beat consensus estimates but also provided reassuring reads on the economy despite elevated energy costs and other risks, per the Earnings Trends.
Total S&P 500 earnings are expected to increase by 23.7% in the June quarter from the same period last year, on 11.4% higher revenues. Q2 earnings estimates have increased for five of the 16 Zacks sectors since the quarter got underway, which offset negative revisions at the remaining 11 sectors.
Likely U.S.-Iran Ceasefire Could Provide Another Boost
Analysts also see geopolitical factors supporting profitability. A ceasefire between the United States and Iran could lower energy prices, potentially boosting corporate margins. WTI crude ETF United States Oil Fund LP (USO) has already lost about 20% over the past month, amid U.S.-Iran peace talks.
The underlying WisdomTree U.S. LargeCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the large-capitalization segment of the U.S. stock market. The fund charges 8 bps in fees and yields 1.17% annually.
The underlying WisdomTree U.S. MidCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the mid-capitalization segment of the U.S. stock market. The fund charges 38 bps in fees and yields 1.22% annually.
The underlying WisdomTree U.S. SmallCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. stock market. The fund charges 38 bps in fees and yields 1.16% annually.
View the Zacks #1 Rank List
Image: Bigstock
Corporate Profits Climb to Fresh Highs: ETFs in Focus
Key Takeaways
U.S. corporate profits continue to surge. Fresh data from the Commerce Department released last week showed total corporate profits reaching an annualized $4.42 trillion in the first quarter of 2026, up from $4.35 trillion in the previous quarter, as quoted on Yahoo Finance.
After-tax corporate profits accounted for 12.4% of U.S. GDP, marking the highest level since the second quarter of 2021, when earnings peaked as the economy emerged from the COVID-19 pandemic, the same article revealed.
Measured against gross domestic income (GDI), which captures the total income earned by households and businesses, corporate profits represented 12.2% — the strongest level since the early 1950s.
Profit Margins Remain Historically Elevated
The latest figures underscore a long-running shift in the U.S. economy. From 1950 through 2010, corporate profits as a share of GDP generally remained below 10%. Over the past 16 years, however, margins have consistently exceeded that threshold, dipping only briefly during the initial stages of the pandemic.
AI and Efficiency Gains Drive Earnings Growth
Artificial intelligence and related infrastructure investments have emerged as major catalysts for the current profit boom. Massive spending on data centers and computing capacity is creating what Barclays describes as a "structural tailwind" for the broader economy, as mentioned in the above-mentioned article.
Earnings Season Highlights Corporate Strength
The robust profit environment was evident during the latest earnings season. Companies not only comfortably beat consensus estimates but also provided reassuring reads on the economy despite elevated energy costs and other risks, per the Earnings Trends.
Total S&P 500 earnings are expected to increase by 23.7% in the June quarter from the same period last year, on 11.4% higher revenues. Q2 earnings estimates have increased for five of the 16 Zacks sectors since the quarter got underway, which offset negative revisions at the remaining 11 sectors.
Likely U.S.-Iran Ceasefire Could Provide Another Boost
Analysts also see geopolitical factors supporting profitability. A ceasefire between the United States and Iran could lower energy prices, potentially boosting corporate margins. WTI crude ETF United States Oil Fund LP (USO) has already lost about 20% over the past month, amid U.S.-Iran peace talks.
ETFs in Focus
WisdomTree U.S. LargeCap ETF (EPS - Free Report)
The underlying WisdomTree U.S. LargeCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the large-capitalization segment of the U.S. stock market. The fund charges 8 bps in fees and yields 1.17% annually.
WisdomTree U.S. MidCap Fund (EZM - Free Report)
The underlying WisdomTree U.S. MidCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the mid-capitalization segment of the U.S. stock market. The fund charges 38 bps in fees and yields 1.22% annually.
WisdomTree U.S. SmallCap Fund (EES - Free Report)
The underlying WisdomTree U.S. SmallCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. stock market. The fund charges 38 bps in fees and yields 1.16% annually.