Leap in margins another sign of late-stage bull market

The US corporate profit share has climbed to historic highs, mainly due to soaring profitability in AI-related technology sectors. But history suggests that such rapid gains in margins are difficult to sustain when profit shares are already elevated, implying that margins will contribute less to earnings growth in future. The good news is that, because the rise in profitability is concentrated in a few sectors rather than broad-based across the economy, it is less indicative of the sort of overheating that would worry the Fed.