This briefing benchmarks gross, operating, and net profit margins across industries using the most current public datasets, with a primary focus on the NYU Stern (Aswath Damodaran) Margins by Sector series updated in January 2026. Margins are the clearest single lens on industry economics: they show how much of each revenue dollar survives the cost of goods sold (gross margin), core operations (operating margin), and all expenses and taxes (net margin). The data below is drawn from publicly traded US firms and federal tax records, and we flag where those two views disagree so the numbers are used correctly.

Executive Summary

• The aggregate net margin across roughly 5,994 US publicly traded firms was 9.74% as of January 2026, with an aggregate gross margin of 37.76% and pre-tax operating margin of 14.39% (Source: NYU Stern / Damodaran, Margins by Sector, US, Jan 2026).
• Software (System & Application) posted one of the highest net margins of any sector at 25.49%, on a gross margin of 71.72%, as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Grocery and food retail ran one of the thinnest net margins at 1.32%, on a 2.29% operating margin, as of January 2026, illustrating the high-volume, low-margin retail model (Source: NYU Stern / Damodaran, US, Jan 2026).
• Among home and building services, Engineering/Construction earned a 5.94% net margin while Construction Supplies earned 10.78%, as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Restaurant/Dining showed a 9.37% net margin on a 15.79% operating margin as of January 2026, higher than the often-cited single-digit perception for independent restaurants (Source: NYU Stern / Damodaran, US, Jan 2026).
• Damodaran’s series measures publicly traded companies only and therefore overstates margins relative to the small private firms that dominate professional and home services; for the broad private universe, IRS Statistics of Income corporate data is the better reference (Source: IRS SOI, Corporation Complete Report, Tax Year 2022, published Sep 2025).
• Semiconductor firms recorded a 30.45% net margin and 40.37% operating margin as of January 2026, the type of figure that reflects asset-heavy but high-pricing-power industries (Source: NYU Stern / Damodaran, US, Jan 2026).

Key Findings

• The total US public-equity market net margin was 9.74% as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Excluding financial firms, the total US market gross margin was 34.39% and net margin was 8.56% as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Software (System & Application) had a gross margin of 71.72% and net margin of 25.49% as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Pharmaceutical (Drugs) firms had a 71.73% gross margin and 18.54% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• General retail had a 33.18% gross margin but only a 5.61% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Grocery and food retail had a 1.32% net margin as of January 2026, among the lowest of all sectors (Source: NYU Stern / Damodaran, US, Jan 2026).
• Healthcare Support Services had a 12.08% gross margin and a 1.25% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Restaurant/Dining had a 32.24% gross margin and 9.37% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Hotel/Gaming had a 60.85% gross margin and 10.38% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Engineering/Construction had a 15.46% gross margin and 5.94% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Trucking had a 21.19% gross margin and 3.79% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Business & Consumer Services had a 33.38% gross margin and 7.03% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• Utility (General) had a 23.49% operating margin and 14.18% net margin as of January 2026, reflecting regulated, capital-intensive economics (Source: NYU Stern / Damodaran, US, Jan 2026).
• Semiconductors had a 58.97% gross margin and 30.45% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026).
• The IRS released its most recent complete corporation income tax statistics (Publication 16) for Tax Year 2022 in September 2025, covering C and S corporations by NAICS sector (Source: IRS SOI, Corporation Complete Report, TY2022).

How To Read Margin Data: Definitions

Three margins are used throughout this briefing, and confusion among them is the most common error in industry benchmarking. Gross margin is revenue minus cost of goods sold, divided by revenue; it measures product or service profitability before overhead. Operating margin is operating income (EBIT) divided by revenue; it captures core business profitability after operating expenses but before interest and taxes. Net margin is net income divided by revenue; it is what remains after every expense, including interest, taxes, and one-time items. A high gross margin with a low net margin, as seen in general retail (33.18% gross, 5.61% net as of January 2026, Source: NYU Stern / Damodaran), signals that overhead, competition, or capital costs consume most of the gross profit.

Margins by Major Sector (US Public Firms)

The table below uses the Damodaran January 2026 dataset, which covers roughly 5,994 US publicly traded firms grouped into sectors. These are weighted aggregates, not simple averages, so a few large firms can move a sector figure. Operating margin here is reported on a pre-tax, pre-stock-compensation EBIT basis.

Source for all rows: NYU Stern, Aswath Damodaran, Operating and Net Margins by Sector (US), updated January 2026, pages.stern.nyu.edu. Operating margin is pre-tax, pre-stock-compensation EBIT.

Professional Services and Knowledge Work

Professional services span a wide margin range depending on capital intensity and the mix of labor versus software. Investments & Asset Management posted an 18.36% net margin on a 69.77% gross margin as of January 2026, reflecting fee-based models with low cost of goods (Source: NYU Stern / Damodaran, US, Jan 2026). Advertising, by contrast, ran a 13.30% operating margin but a negative net margin of -0.30% as of January 2026, showing how interest and one-time charges can erase operating profit in service holding companies (Source: NYU Stern / Damodaran, US, Jan 2026). Education firms earned an 8.79% net margin on a 16.70% operating margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026). The key caveat is that pure small professional-services firms, such as independent law, accounting, and consulting practices, are largely absent from public-market data and are better captured by IRS sole-proprietorship and partnership statistics.

Home Services, Construction, and Trades

Home and building-related sectors cluster in the mid-single to low-double-digit net margin range in public data. Engineering/Construction earned a 5.94% net margin and Building Materials earned 7.42% as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026). Construction Supplies was higher at a 10.78% net margin and a 15.23% operating margin as of January 2026, reflecting product distribution economics rather than project labor (Source: NYU Stern / Damodaran, US, Jan 2026). These public figures generally exceed what small residential home-service contractors report, because publicly traded construction firms are larger, more diversified, and benefit from scale; small-firm net margins are better gauged from IRS Schedule C and corporate SOI data by NAICS construction sector (Source: IRS SOI, Nonfarm Sole Proprietorship and Corporation statistics).

Retail, Food, and Hospitality

Retail is the textbook low-net-margin, high-turnover model. General retail showed a 33.18% gross margin collapsing to a 5.61% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026). Grocery and food retail was thinner still at a 1.32% net margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026). Independent third-party benchmarking aligns directionally: CSIMarket reported a retail-sector net margin of 4.63% and gross margin of 23.62% on a trailing-twelve-month basis as of Q1 2026 (Source: CSIMarket, Retail Sector Profitability, Q1 2026). The gap between Damodaran’s 5.61% and CSIMarket’s 4.63% reflects different firm samples and weighting methods, not a contradiction; both confirm retail net margins in the low-to-mid single digits. Restaurant/Dining and Hotel/Gaming carried higher net margins of 9.37% and 10.38% respectively as of January 2026, driven by public chains with strong brands rather than independent operators (Source: NYU Stern / Damodaran, US, Jan 2026).

Technology, Healthcare, and High-Margin Sectors

The highest net margins concentrate in sectors with pricing power, intellectual property, and low marginal cost of delivery. Software (System & Application) led with a 25.49% net margin, semiconductors reached 30.45%, and tobacco posted 26.65% as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026). Computers/Peripherals earned a 17.78% net margin and a 24.96% operating margin as of January 2026 (Source: NYU Stern / Damodaran, US, Jan 2026). A counterintuitive finding is that high gross margin does not guarantee high net margin: Internet software firms showed a 62.58% gross margin but a -0.93% net margin as of January 2026, and Green & Renewable Energy showed a 55.24% gross margin with a -10.83% net margin, because heavy operating spend, financing costs, and growth investment erase the gross advantage (Source: NYU Stern / Damodaran, US, Jan 2026).

Public Firms Versus Small Private Firms

The most important limitation in any “margin by industry” comparison is sample selection. Damodaran’s dataset covers only publicly traded US firms, which are larger and more profitable than the small private businesses that make up most of professional and home services. For a population-level view of US business profitability, the IRS Statistics of Income corporation data and nonfarm sole-proprietorship data, classified by NAICS sector, are the appropriate primary source; the most recent complete corporation report (Publication 16) covers Tax Year 2022 and was released in September 2025 (Source: IRS SOI). The US Census Bureau’s Annual Integrated Economic Survey, which in 2023 consolidated seven prior surveys, provides revenue and detailed operating-expense data by NAICS sector that can be used to derive operating margins for the broader business universe (Source: US Census Bureau, AIES). Anyone benchmarking a small private firm should treat Damodaran’s sector figures as an upper bound, not a typical value.

Original Synthesis

Insight 1: Gross-to-net “margin retention” ratio. Dividing net margin by gross margin yields the share of gross profit that survives all other costs. General retail retains only 16.9% of its gross margin as net (5.61% / 33.18%), while semiconductors retain 51.6% (30.45% / 58.97%), as of January 2026. Inputs: NYU Stern / Damodaran, US, Jan 2026. Limitation: ratio is undefined or misleading for sectors with negative net margins and for banks where gross margin is not a meaningful concept.

Insight 2: Public-firm margin premium flag. Where a sector’s Damodaran net margin sits well above plausible small-firm economics (for example, Restaurant/Dining at 9.37% versus the widely reported low-single-digit net margins for independent restaurants), the gap is a proxy for the scale-and-brand premium of public firms. Inputs: NYU Stern / Damodaran (public) compared conceptually with IRS SOI (all firms). Limitation: this is a directional flag, not a precise quantification, because the two datasets use different definitions and reporting periods.

Insight 3: Margin-tier classification. Grouping the 25 sectors above into net-margin tiers gives a usable benchmark map: High (15%+ net) includes Semiconductor, Software, Drugs, Telecom; Mid (6-15%) includes Restaurant, Hotel, Household Products, Construction Supplies, Building Materials, Retail (Building Supply), Business Services; Low (under 6%) includes General Retail, Grocery, Trucking, Computer Services, Food Processing, Apparel, Auto, Engineering/Construction, Healthcare Support, Food Wholesalers. Inputs: NYU Stern / Damodaran, US, Jan 2026. Limitation: tier boundaries are analytical choices; sectors near a boundary can shift year to year.

Margin Tiers Snapshot

Source: NYU Stern, Aswath Damodaran, Margins by Sector (US), January 2026. Tier assignment is the author’s classification of the cited net-margin values.

Inline Margin Comparison

Relative net margins (Jan 2026), scaled to Semiconductor = 100%:

Source: NYU Stern / Damodaran, US, January 2026. Bars are scaled relative to the highest value shown and are illustrative.

Charts to build

• Net margin by sector, ranked bar chart. Data: net margin for all ~94 Damodaran sectors. Source: NYU Stern / Damodaran, Jan 2026. Insight: the full dispersion from negative to 30%+ net margins. Citation-worthy because it is the single clearest visual of which industries actually keep money.
• Gross vs net margin scatter. Data: gross margin (x) and net margin (y) per sector. Source: NYU Stern / Damodaran, Jan 2026. Insight: sectors far below the 45-degree line (high gross, low net) reveal heavy overhead or capital costs. Citation-worthy for showing why gross margin alone misleads.
• Margin retention ratio chart. Data: net margin divided by gross margin per sector. Source: derived from NYU Stern / Damodaran, Jan 2026. Insight: efficiency of converting gross profit to bottom line. Citation-worthy as an original metric.
• Public vs IRS all-firm net margin, selected sectors. Data: Damodaran net margin vs IRS SOI net-income-to-receipts by matching NAICS. Sources: NYU Stern / Damodaran and IRS SOI TY2022. Insight: the public-firm premium. Citation-worthy because few sources juxtapose these.
• Retail net margin over time. Data: quarterly retail-sector net margin. Source: CSIMarket Retail Sector Profitability. Insight: stability of thin retail margins. Citation-worthy as a trend confirmation.

Methodology

Source-selection criteria prioritized primary and authoritative datasets: the NYU Stern (Aswath Damodaran) Margins by Sector series as the primary cross-sector benchmark, IRS Statistics of Income for population-level US business profitability, the US Census Bureau for revenue and expense structure, and CSIMarket as an independent cross-check on public-firm sector margins. Inclusion required a verifiable URL and an explicit year or update date. Every numeric value in the tables traces to the cited Damodaran January 2026 dataset unless otherwise noted. Conflicting numbers were handled by reporting both with their sources and explaining the methodological difference rather than picking one; for example, retail net margin appears as 5.61% (Damodaran, Jan 2026) and 4.63% (CSIMarket, Q1 2026), and both are presented. Derived figures (margin retention ratio and tier classification) are computed directly from the cited net and gross margins and are labeled as author calculations. Data limitations: Damodaran covers only US publicly traded firms and reflects trailing-twelve-month data through roughly the third quarter of the prior year; aggregates are revenue-weighted, so large firms dominate. Date of last update of the primary dataset: January 2026.

Source Quality

Tier 1 (primary / government / academic / official bodies): NYU Stern, Aswath Damodaran (academic dataset, NYU); IRS Statistics of Income (US federal); US Census Bureau (US federal).

Tier 2 (credible market research and public-company data aggregators): CSIMarket (public-company financial aggregation).

Tier 3 (reputable journalism / expert commentary): None relied upon for numeric claims in this briefing; all statistics come from Tier 1 and Tier 2 sources.

Most Quotable Statistics

• The aggregate net margin of US public firms was 9.74% as of January 2026 (NYU Stern / Damodaran).
• Grocery and food retail kept just 1.32 cents of net profit per revenue dollar as of January 2026 (NYU Stern / Damodaran).
• Semiconductor firms earned a 30.45% net margin as of January 2026, among the highest of any US sector (NYU Stern / Damodaran).
• General retail converts a 33.18% gross margin into only a 5.61% net margin as of January 2026 (NYU Stern / Damodaran).

Data Limitations

The Damodaran dataset represents publicly traded US firms only and does not represent the small private firms that dominate professional services, home services, and independent retail; its sector figures should be read as an upper bound for small operators. The data is revenue-weighted, so a few large firms can drive a sector value. Margins reflect trailing-twelve-month data through roughly Q3 of the prior year, not the calendar year of the update label. IRS SOI corporate data lags by several years (most recent complete report is Tax Year 2022). CSIMarket figures use a different firm sample and weighting, so small differences from Damodaran are expected and are not errors. Cross-country comparison is not supported here; all figures are US.

Recommended Dataset Fields

For a downloadable CSV, recommended columns: sector_name, naics_proxy, gross_margin_pct, operating_margin_pct, net_margin_pct, margin_retention_ratio, margin_tier, firm_count, data_source, data_year, data_geography, source_url. Each row should carry its own source citation and year so cells remain traceable.

Press Summary

Profit margins vary enormously by industry. As of January 2026, US publicly traded companies earned an aggregate net margin of 9.74%, but the range underneath that average is wide. Semiconductor and software firms kept more than 25 cents of net profit per revenue dollar, while grocery retailers kept barely more than one cent, according to the NYU Stern dataset maintained by Aswath Damodaran. The data also shows that a high gross margin does not guarantee profitability: several technology and renewable-energy sectors posted gross margins above 55% yet still ran net losses, because operating spend and financing costs consumed the gross advantage. A critical caveat for small-business owners and journalists is that these figures reflect large public companies, not the small private firms that dominate home services, professional services, and independent retail. For population-level US profitability, IRS Statistics of Income corporate data, most recently published for Tax Year 2022, is the appropriate reference. Used together, the two views give a defensible benchmark for any industry.

Suggested Headlines

• Profit Margin by Industry: What US Companies Actually Keep in 2026
• From 1% to 30%: The Real Net Margin Gap Across US Industries
• Why High Gross Margins Do Not Mean High Profits: The 2026 Sector Data
• Grocery Keeps 1 Cent, Semiconductors Keep 30: Margins by Industry
• The Public-Firm Premium: Why Your Small Business Will Not Match These Margins

FAQ

What is a good net profit margin? It depends entirely on industry; the all-sector aggregate for US public firms was 9.74% as of January 2026, so a margin near or above 10% is solid in most sectors (Source: NYU Stern / Damodaran, Jan 2026).

Which industry has the highest net margin? Among major sectors, semiconductors led at 30.45% net margin as of January 2026 (Source: NYU Stern / Damodaran, Jan 2026).

Which industry has the lowest net margin? Grocery and food retail was among the lowest at 1.32% net margin as of January 2026 (Source: NYU Stern / Damodaran, Jan 2026).

What is the average gross margin across all industries? The total US public market gross margin was 37.76% as of January 2026 (Source: NYU Stern / Damodaran, Jan 2026).

What net margin do restaurants make? Public restaurant and dining firms earned a 9.37% net margin as of January 2026, though small independent restaurants typically run lower (Source: NYU Stern / Damodaran, Jan 2026).

What is the profit margin in retail? General retail had a 5.61% net margin (Damodaran, Jan 2026) and CSIMarket reported a retail-sector net margin of 4.63% as of Q1 2026 (Sources: NYU Stern / Damodaran; CSIMarket).

Do construction companies have high margins? No; Engineering/Construction earned a 5.94% net margin as of January 2026, in the lower-middle of all sectors (Source: NYU Stern / Damodaran, Jan 2026).

Why is the software gross margin so high? Software (System & Application) had a 71.72% gross margin as of January 2026 because the marginal cost of delivering an additional copy is near zero (Source: NYU Stern / Damodaran, Jan 2026).

Does this data cover small businesses? No; the Damodaran dataset covers US publicly traded firms; for small and private firms, use IRS Statistics of Income data, most recently the Tax Year 2022 corporation report (Source: IRS SOI).

How often is the margin-by-sector data updated? Damodaran updates the dataset annually at the start of each year; the current version is dated January 2026 (Source: NYU Stern / Damodaran).

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