Markets

Ranked: U.S. Industries Where Companies Make the Most Profit

Published

1 month ago

February 6, 2025

Pallavi Rao

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Ranked: U.S. Industries With the Highest Profit Margins

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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.

ℹ️ Average net margins are calculated off cumulative net income and sales from each publicly traded company in the industry in the past 12 months. Data last updated in January 2025. Please see the source’s methodology page for more background information.

Big Tobacco is Still Making Big Bucks

Big Tobacco’s business model is still thriving, as evidenced by the sector’s 32% net margin.

Rank	Industry Name	Average Net Margin	Example Firms	# of Publicly-Traded U.S. Firms
1	Tobacco	32.0%	Philip Morris / Altria Group	12
2	Entertainment Software	27.4%	Meta / Alphabet	81
3	Retail REITs	25.5%	Simon Property Group / Kimco Realty Corporation	28
4	Diversified	25.2%	Berkshire Hathaway / Honeywell International	21
5	Rail Transportation	24.3%	Union Pacific / Norfolk Southern Corporation	4
6	System & Application Software	22.9%	Microsoft / Oracle	333
7	Financial Services*	22.3%	Visa / Mastercard	166
8	Water Utilities	21.3%	American Water Works / Essential Utilities	15
9	Semiconductor Equipment	20.1%	Applied Materials / Lam Research Corporation	30
10	Semiconductor	20.0%	Nvidia / Broadcom	63
11	Oil & Gas Production**	19.5%	ConocoPhillips / Diamondback Energy	147
12	Asset Management	17.6%	BlackRock / Blackstone	231
13	Computers & Peripherals	16.8%	Apple / Dell	35
14	Oil & Gas Distribution	16.2%	The Williams Companies / Kinder Morgan	24
15	General Utilities	15.5%	Sempra / Dominion	14
16	Beverages***	14.1%	Coca-Cola / Pepsi	29
17	REITs	12.5%	Prologis / Equinix	192
18	Homebuilding	12.0%	D.R. Horton / Lennar Corporation	30
19	Power	11.3%	NextEra Energy / The Southern Company	48
20	Construction Supplies	11.2%	Caterpillar / PACCAR	46
21	Real Estate Development	11.1%	AMREP Corporation / Forestar Group	15
22	Wireless Telecom	10.8%	T-Mobile / Gogo Inc	11
23	Restaurant/Dining	10.6%	McDonald's / Starbucks	62
24	Building Materials	10.6%	Carrier Global Corporation / Lennox International Inc	39
25	Shipbuilding & Marine	10.5%	Kirby Corporation / Matson, Inc	8
26	Telecom Equipment	10.5%	Cisco Systems / Motorola Solutions	61
27	Household Products	10.4%	Procter & Gamble / Colgate-Palmolive	101
28	Shoes	10.2%	Nike / Steven Madden	12
29	Coal & Related Energy	10.1%	CONSOL Energy Inc / Peabody Energy Corporation	16
30	Machinery	10.0%	Parker-Hannifin Corporation / Illinois Tool Works	109

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.