Visual Capitalist: U.S. Industries Where Companies Make The Most Profit
Ranked: U.S. Industries With the Highest Profit Margins
The investment playbook for 2025 will be very different from 2024, with disruptions expected in trade, AI-spending, and energy markets.But for an overall look into U.S. markets, here’s some data on which sectors can be generally expected to turn a profit and deliver returns.
In this chart, we rank the top U.S. industries by their average net profit margin in 2024. Data is sourced from Damodaran Online, a database maintained by Aswath Damodaran, faculty at the NYU Stern School of Business.
Big Tobacco is Still Making Big Bucks
Big Tobacco’s business model is still thriving, as evidenced by the sector’s 32% net margin.
Note: *Excludes banking. **Includes exploration. ***Excludes alcohol. To see how companies are categorized, download this file which lists company name, SIC code, and related industry grouping.
How are American tobacco companies still making so much money?
Briefly broken down: they sell an inexpensive and addictive product to a loyal customer base. Suppliers (farmers) have very little bargaining power, keeping their costs slow. And an advertisement ban prevents new players from entering the market.
And while adult smoking rates are trending downward in the U.S., emerging markets are more than offsetting U.S. sales declines.
Globally, the sector’s margin is even higher: at 50%. This translates into 50 cents in profit for every dollar of revenue earned.
Other Profitable Industries
Big Tech’s margins aren’t far behind Big Tobacco. The broader ad-driven space, including companies like Meta and Google, averages a 27% net margin.
The system and application software industry, with companies like Microsoft and Oracle, follow at 23%. And the semiconductor space (chipmakers, designers, and equipment manufacturers) also exceeds 20%.
The chart also highlights the structure of the U.S. market. Some industries are dominated by a few strong leaders (like shoes), while others, such as apps and financial services, have more firms.
SOURCE: https://www.visualcapitalist.com/ranked-u-s-industries-where-companies-make-the-most-profit/