Research and consulting firm TS Lombard points out that the share of US corporate profits in GDP has risen to its highest level since World War II, but profit growth may slow significantly in 2027. US National Accounts data shows that corporate profits grew by approximately 25% year-on-year in the year ending in the second quarter of 2026. On an equal-weighted basis for the S&P 500, the technology sector contributed about two-thirds of profit growth, with the energy sector also being a significant driver.
Perkins believes that current profit expansion is primarily supported by investment in AI infrastructure, rising energy prices, and relatively moderate labor costs. As a net energy exporter, the US benefits from high oil prices; large cloud computing vendors continue to expand capital expenditures, driving revenue growth for suppliers of chips, data centers, and other products. At the same time, companies meet new demand through productivity improvements, and wage pressures remain moderate, further increasing profit margins.
TS Lombard predicts that these three supporting factors will weaken simultaneously in 2027. As the positive contribution of rising energy prices fades and the year-on-year growth rate of AI capital expenditures slows, the momentum for corporate revenue growth may decline. Meanwhile, U.S. employment demand is recovering, immigration restrictions are impacting labor supply, and wage growth may accelerate again, pushing up the share of labor income and compressing corporate profit margins. Even if the U.S. economy continues to expand, corporate profit growth may still slow.
