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high-level macro investors to stock pickers, and everything in between — it became clear to us that it’s time to start talking more about 2026," RBC Capital Markets’ Lori Calvasina said Monday.She preliminarily sees the S&P 500 ending 2026 at 7,100 as earnings per share (EPS) grow about 10% to $297.Her projections are derived from a blend of five models that factor in almost every imaginable macro variable.But one assumption caught my attention."We are baking in some margin expansion for 2026," she wrote. On the subject of profit margins, she added, "One of our biggest takeaways from 2Q25 reporting season is that companies are laser focused on mitigation strategies around tariffs."This is in line with Morgan Stanley’s analysis of Q2 earnings calls: "Unsurprisingly, we saw a significant increase in the number of mentions of tariff mitigation strategies last quarter with many companies citing multiple strategies."Executives are focused on mitigating costs associated with new tariffs. (Source: Morgan Stanley via TKer)And it’s not just tariff mitigation that could bolster profit margins in the quarters to come."Drivers for margin strength include operating leverage, continued efficiency gains (AI and others), slowing employment inflation in many labor-intensive sectors, and the potential for cost-cutting from deregulation," BofA’s Savita Subramanian wrote Wednesday.While margin expansion in 2025 has mostly been driven by big tech companies, that growth is expected to broaden out across industries in 2026.Subramanian expects EPS to grow about 10% to $298 in 2026 as net margins increase by 40 basis points to 13.2%. She has yet to offer a 2026 price target for the S&P 500.Goldman Sachs also has yet to publish forecasts for 2026. (These calls typically come later in Q4.) However, they have been discussing the prospects for growth in profit margins."[A] cooling labor market is a tailwind to corporate profits, all else equal," Goldman Sachs’ David Kostin wrote in a Sept. 12 note."Profit margins typically expand when companies can raise prices more quickly than materials input and labor costs," Kostin said. "Our economists expect the U.S. economy will continue to expand in 2H 2025 and 2026, but slow job growth will keep a lid on wage growth."Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,664.36 +32.40 (+0.49%)Dow 3046,315.27 +172.87 (+0.37%)Nasdaq22,631.48 +160.78 (+0.72%)Russell 20002,448.77 -18.93 (-0.77%)VIX15.45 -0.25 (-1.59%)Gold3,705.80 +27.50 (+0.75%)PortfolioSign in to access your portfolioSign inTop gainersOKLO Oklo Inc. 135.23 +30.26 (+28.83%)BHF Brighthouse Financial, Inc. 57.59 +12.33 (+27.24%)QUBT Quantum Computing Inc. 23.27 +4.92 (+26.81%)MENS Jyong Biotech Ltd. 65.62 +13.87 (+26.80%)SMR NuScale Power Corporation 46.77 +8.65 (+22.69%)Top losersDXCM DexCom, Inc. 67.45 -8.33 (-10.99%)HESM Hess Midstream LP 35.36 -4.12 (-10.44%)CART Maplebear Inc. 41.50 -3.90 (-8.59%)ORLA Orla Mining Ltd. 10.22 -0.85 (-7.68%)RXO RXO, Inc. 16.14 -1.31 (-7.51%)Most activeNVDA NVIDIA Corporation 176.60 +0.36 (+0.20%)OPEN Opendoor Technologies Inc. 9.57 -0.37 (-3.72%)INTC Intel Corporation 29.58 -0.99 (-3.24%)HOOD Robinhood Markets, Inc. 124.78 +3.87 (+3.20%)WBD Warner Bros. 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