Corporate profits reached their highest share of GDP since 1947 in late 2025, even as economic growth slowed. Wall Street analysts predict stronger earnings ahead, with Morgan Stanley's Mike Wilson forecasting a 17% increase in S&P 500 profits for 2026. This optimism propelled the S&P 500 to record levels, though experts warn that the room for further profit expansion is shrinking.

Technology investments, particularly AI, have boosted productivity across sectors beyond just tech. The absence of recessions since 2009 has allowed profit shares to accumulate, while market concentration has given firms greater pricing power. Corporate concentration has been rising for a century, with less than 1% of corporations now generating over 90% of all profits.

Policy changes including tax cuts and deregulation have fueled profit growth, but these benefits may be reversing. With interest rates no longer falling and potential trust-busting measures looming, profits at these record levels face pushback. Worker backlash could become disruptive to profit margins regardless of political affiliation, according to KPMG's Diane Swonk.