U.S. Corporate Profits Hit 12.2% of GDP in Q1, Highest Since 1950s

U.S. domestic companies captured 12.2% of gross domestic income in the first quarter, the highest profit share since the early 1950s, according to data released Thursday. The surge is driven by an AI infrastructure investment boom that Barclays analysts describe as broadening and accelerating, underpinned by ambitious infrastructure programs. This cycle ranks among historic American capital investment periods, comparable to 19th-century railroad construction, the 1980s energy boom, and 1990s internet infrastructure buildout.

AI Infrastructure Investment Reaches Multi-Trillion Dollar Scale

JPMorgan corporate bond analysts estimated total capital expenditures on AI will grow to $5.5 trillion through 2030, an increase from their November estimate of $5.1 trillion. Barclays analysts project aggregate AI infrastructure spending will hit $1 trillion by 2027. "A trillion-dollar build-out does not stay inside data centers. It flows into power generation, electrical infrastructure, construction, cooling systems, and the labor required to install and maintain all of it," Barclays analysts wrote in a Thursday report. "For as long as this cycle runs, it acts as a structural tailwind to earnings, employment, and GDP growth."

Micron Technology Earnings Lift Memory Chip Stocks Thursday

Memory chip manufacturer Micron Technology reported strong profits and guidance Thursday, driving its stock up almost 16%. The gains rippled through related stocks including Sandisk and Western Digital. However, Apple shares dropped after announcing price increases for laptops and tablets to offset AI-driven surges in data storage and memory costs. AI server makers Dell and Hewlett-Packard Enterprise, along with hyperscalers Microsoft and Oracle, also experienced sharp declines.

Second-Quarter Earnings Season Begins July 14

JPMorgan Chase will kick off the second-quarter earnings season on July 14. Analysts expect the S&P 500 will grow earnings by 21.3% for the three months ending June 30.

FAQ

What percentage of U.S. GDP did corporate profits reach in the first quarter? U.S. domestic companies captured 12.2% of gross domestic income in the first quarter, the highest level since the early 1950s, according to data released Thursday.

How much will AI infrastructure spending reach by 2027? Barclays analysts project aggregate AI infrastructure spending will hit $1 trillion by 2027, while JPMorgan estimates total AI capital expenditures will grow to $5.5 trillion through 2030.

When does the second-quarter earnings season start? The second-quarter earnings season begins July 14 when JPMorgan Chase reports results. Analysts expect S&P 500 earnings to grow 21.3% for the quarter ending June 30.