In this article, we will take a look at the 16 most profitable industries in the US in 2024. You can skip our detailed discussion and go directly to 5 Most Profitable Industries in the US in 2024.
An Outlook of the US Economy & its Impact on Business
Only recently markets in the United States witnessed unprecedented downturns amid fears over a possible recession. The unemployment rate in the United States reached 4% in May, the highest in over two years. On August 2, the US Bureau of Labor Statistics reported that the unemployment rate in the United States grew to 4.3% in July, adding only 114,000 jobs during the month. Temporary layoffs in the United States reached 1.1 million in July and the head count for long-term unemployed individuals was 1.5 million. As the unemployment rate in the US continues to rise, the risk of an impending recession looms over the economy deterring investor confidence.
The fears of a declining economy were aggravated as probable rate cuts by the Fed were delayed to the last quarter of 2024. On August 16, Reuters reported that the Fed is expected to deliver a rate cut next month in September. Experts predict that the rate cut will ease inflationary pressures. As per the rate cut expectations, consensus opinions hint towards a quarter to half-point cut, and a 30 basis point cut in the future. While the US economy is not officially in a recession, the quarterly real GDP growth expectation collapsed to 1.5% from over 4% in May, as of July 5, according to Reuters.
The impact of uncertain macroeconomic conditions on consumer spending and business outlook has been immense. On May 30, Reuters reported that the US economy experienced sluggish growth in the first quarter, unable to meet expectations. Between January and March, GDP expanded by only 1.3%, down from the previously estimated 1.6%. The report suggests that high interest rates to cool the economy have led to declines in consumer spending, which were revised down to an annualized rate of 2%. Corporate profits declined by 0.6%, after reaching a record high in the last quarter of 2023.
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The Company Driving the Most Profitable Industries
Despite macroeconomic challenges, some industries have been performing immensely well. The software applications and semiconductor industries are some of the most profitable industries in the United States. NVIDIA Corporation (NASDAQ:NVDA) calls itself the “Engine of AI” as it pioneers the hardware and software for AI, such as semiconductors and AI applications. NVIDIA (NASDAQ:NVDA) not only designs and produces graphics processing units (GPUs), but it also provides cloud products to enterprises.
The company currently holds a 95% market share of data center GPUs and 80% of the market share of AI accelerators. It reported $22.6 billion in data center revenue in Q1 2024, up by 23% from the previous quarter and 427% from a year ago. Compute and networking revenue drove data center revenue, growing by 5x and 3x than the previous year.
NVIDIA Corporation (NASDAQ:NVDA) is expanding its footprint in the AI and robotics industry by forming strategic partnerships with other tech giants. In the first quarter of 2024, the company launched optimizations across NVIDIA’s data center in collaboration with Google. Figure, a robotics startup, trained on Nvidia’s GPUs, announced the launch of its next-generation humanoid robot on August 8. The new robot has ultimate computing power, allowing it to perform human tasks autonomously.
Overall, NVIDIA’s (NASDAQ:NVDA) role in harnessing technology is crucial to the US economy. Currently, the company provides chips to 95% of the market and is in the works of launching a new batch that also runs the company’s software infrastructure. Now transformed into an AI company, Nvidia is powering through to add another $15 trillion to the US economy.
While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some cheaper AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Now that we have studied the US economy, let’s take a look at the 16 most profitable industries in the United States in 2024. You can also read our piece on the US states with the highest income tax revenue per capita.
An aerial view of an oil rig in the mid-western United States, capturing the importance of the natural gas industry in the region.
Our Methodology
To come up with the 16 most profitable industries in the US in 2024, we sourced our data from New York University. We used average industry net margins that have been calculated for the year 2024 across multiple companies. Our list is in ascending order of the industry net margins in 2024.
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16 Most Profitable Industries in the US in 2024
16. Diversified
Industry Net Margin (2024): 15.84%
The diversified industry ranks 16th on our list of the most profitable industries in the United States with an industry net margin of 15.84%. The diversified industry involves companies that operate in several lines of business. Honeywell International Inc. (NASDAQ:HON) is an example of a company that operates in multiple areas of business including automation, performance materials and technologies, safety and production solutions, and aerospace. Honeywell International Inc. (NASDAQ:HON) logged $5.78 billion in trailing 12-month net income and $37.33 billion in trailing 12-month revenue, as of June 30. With a market capitalization of $129.53 billion, Honeywell International Inc. (NASDAQ:HON) is one of the largest companies in the diversified industry.
15. Semiconductor
Industry Net Margin (2024): 16.47%
The semiconductor industry is one of the most profitable industries in the United States, with an industry net margin of 16.47%. The semiconductor industry entails the design and fabrication of semiconductors and semiconductor devices. Broadcom Inc. (NASDAQ:AVGO) is one of the largest semiconductor companies in the United States, with a market capitalization of $771.41 billion, as of August 16. Broadcom (NASDAQ:AVGO) specializes in the development and manufacturing of semiconductor and software products. As of April 30, Broadcom (NASDAQ:AVGO) logged $10.27 billion and $42.62 billion in trailing 12-month net income and revenue, respectively.
14. Real Estate (General/Diversified)
Industry Net Margin (2024): 16.91%
The real estate (general) industry ranks 14th on our list of the most profitable industries in the United States with an industry net margin of 16.91%. Prologis, Inc. (NYSE:PLD) is a prominent real estate company with a market capitalization of $113.75 billion, as of August 16. Prologis, Inc. (NYSE:PLD) builds, owns, and operates logistics real estate and has over 1.1 million employees. Prologis, Inc. (NYSE:PLD) logged $7.31 billion and $3.17 billion in trailing 12-month net income and revenue, respectively, as of March 31.
13. Computers/Peripherals
Industry Net Margin (2024): 17.47%
The computer/peripherals industry is one of the most profitable industries in the United States. The computer peripherals industry deals with the manufacturing of peripheral equipment for computers like keyboards, monitors, scanners, and/or printers. Dell Technologies Inc. (NYSE:DELL) is a technology company that makes computers and related products. Dell (NYSE:DELL) logged $3.59 billion in trailing 12 months net income and $89.75 billion in trailing 12-month revenue, as of April 30. With a market capitalization of $78.72 billion, as of August 16, Dell (NYSE:DELL) is one of the biggest companies in the computer and peripherals industry.
12. Semiconductor Equipment
Industry Net Margin (2024): 17.94%
The semiconductor equipment industry ranks 12th on our list of the most profitable industries in the United States with an industry net margin of 17.94%. Applied Materials, Inc. (NASDAQ:AMAT) is a popular semiconductor equipment and materials company with a market capitalization of $172.14 billion, as of August 16. Applied Materials (NASDAQ:AMAT) produces nano-manufacturing technology and software products for the fabrication of semiconductor chips, flat panel displays, and solar photovoltaic cells. Applied Materials (NASDAQ:AMAT) logged $7.31 billion and $26.5 billion in trailing 12-month net income and revenue, respectively, as of April 30.
11. Software (System & Application)
Industry Net Margin (2024): 19.14%
The software (system and application) industry ranks 11th on our list of the most profitable industries in the United States. The system and application software industry includes businesses engaged in the development, maintenance, and publication of software. Salesforce, Inc. (NYSE:CRM) is one of the biggest software companies in the United States, with a market capitalization of $254.76 billion, as of August 16. The company offers cloud-based applications in the domains of e-commerce, marketing, automation, analytics, and customer service. Some of the most prominent products by Salesforce (NYSE:CRM) include Einstein 1, Slack, and Tableau. Salesforce, Inc. (NYSE:CRM) has a trailing 12-month net income and revenue of $5.47 billion and $35.74 billion, respectively, as of April 30.
10. Utility (Water)
Industry Net Margin (2024): 19.34%
The water utility industry is responsible for the sourcing, purification, and distribution of water for commercial and corporate consumers. American Water Works Company, Inc. (NYSE:AWK) is a water utility company in the United States. The company provides water and wastewater services to 14 million people across 14 states across the country. American Water Works Company (NYSE:AWK) has a trailing 12-month net income and revenue of $959 million and $4.31 billion, respectively, as of March 31. With a market capitalization of $27.47 billion, American Water Works Company, Inc. (NYSE:AWK) is one of the biggest water utility companies in the United States.
9. Investments & Asset Management
Industry Net Margin (2024): 19.82%
With an industry net margin of 19.82%, the investments and asset management industry ranks ninth on our list of the most profitable industries in the US in 2024. The asset management industry entails financial services related to the buying and selling of assets, building investment portfolios, and creating wealth for clients. BlackRock, Inc. (NYSE:BLK) is one of the largest investment and asset management companies in the United States, with a market capitalization of $129.24 billion, as of August 16. BlackRock (NYSE:BLK) provides investment advisory services and currently manages over $10 trillion in assets. BlackRock (NYSE:BLK) has a trailing 12-month net income and revenue of $6.05 billion and $18.69 billion, respectively, as of June 30.
8. Software (Entertainment)
Industry Net Margin (2024): 20.35%
The entertainment software industry ranks eighth on our list of the most profitable industries in the United States. The entertainment software industry entails the creation of digital tools and applications for entertainment. Netflix, Inc. (NASDAQ:NFLX) is a large streaming media company based in California, United States, with a market capitalization of $289.29 billion, as of August 16. Netflix (NASDAQ:NFLX) has a trailing 12-month net income of $6.45 billion and a trailing 12-month revenue of $34.9 billion. Netflix (NASDAQ:NFLX) is available in more than 190 countries and expects its revenue to grow by 14% to 15% in FY 2024.
7. Retail (REITs)
Industry Net Margin (2024): 23.32%
The retail real estate investment trusts (REITs) industry entails the ownership and management of retail properties such as malls, retail markets, and shopping centers. Realty Income Corporation (NYSE:O) is a prominent name in the retail (REITs) industry, with a market capitalization of $52.3 billion, as of August 16. Realty Income (NYSE:O) owns over 15,000 properties across 90 industries in the United States, the United Kingdom, and six in Europe. Realty Income (NYSE:O) has a trailing 12-month net income of $777 million and a trailing 12-month revenue of $4.4 billion, as of March 31.
6. Transportation (Railroads)
Industry Net Margin (2024): 23.52%
With an industry net margin of 23.52%, the railroad industry ranks as the sixth most profitable industry in the United States. The Union Pacific Corporation (NYSE:UNP) is one of the biggest companies in the railroad industry with a market capitalization of $148.97 billion, as of August 16. Union Pacific (NYSE:UNP), a railroad franchise, covers 23 states in the United States and has been operational for the past 160 years. Union Pacific (NYSE:UNP) logged a trailing 12-month net income and revenue of $6.4 billion and $29.1 billion, respectively, as of March 31.
5. Oil/Gas Distribution
Industry Net Margin (2024): 23.59%
The oil and gas distribution industry ranks fifth on our list with an industry net margin of 23.59%. As the name suggests, the industry deals with the distribution and transportation of oil and gas. Enterprise Products Partners L.P. (NYSE:EPD) is one of the biggest oil and gas distribution companies in the United States. The company is a leading provider of midstream energy services to producers and consumers of crude oil and natural gas. Enterprise Products Partners L.P. (NYSE:EPD) had a trailing 12-month net income and revenue of $5.6 billion and $52.03 billion, respectively, as of March 31. With a market capitalization of $63.31 billion, as of August 16, Enterprise Products Partners (NYSE:EPD) is considered one of the largest distributors of oil and gas in the United States.
4. Tobacco
Industry Net Margin (2024): 27.52%
The tobacco industry has an industry net margin of 27.52%, contributing to its ranking as one of the most profitable industries in the United States. Philip Morris International Inc. (NYSE:PM) is one of the largest tobacco companies in the United States and globally. The company logged a trailing 12-month net income and revenue of $7.94 billion and $35.95 billion, respectively, as of March 31. Philip Morris International Inc. (NYSE:PM) sells its products in more than 180 countries and is the company behind the famous cigarette brand, Marlboro. Philip Morris International Inc. (NYSE:PM) has a market capitalization of $183.56 billion, as of August 16.
3. Oil/Gas (Production and Exploration)
Industry Net Margin (2024): 28.26%
The oil and gas production and exploration industry ranks third on our list of the most profitable industries in the United States with an industry net margin of 28.26%. Exxon Mobil Corporation (NYSE:XOM), with a market capitalization of $525.01 billion, as of August 16, is one of the biggest oil and gas exploration companies in the United States. Exxon (NYSE:XOM) operates through a variety of segments, of which, its upstream segment deals with the exploration and production of crude oil and natural gas. Exxon Mobil Corporation (NYSE:XOM) has a trailing 12-month net income and revenue of $32.8 billion and $341.1 billion, respectively, as of March 31.
2. Banks (Regional)
Industry Net Margin (2024): 29.67%
Second on our list with an industry net margin of 29.67%, is the banking industry (regional). The banks (regional) industry, unlike money centers, offer specified commercial banking services to customers. These banks are relatively smaller than money centers. The PNC Financial Services Group, Inc. (NYSE:PNC) is a popular financial service and banking company with a market capitalization of $68.77 billion, as of August 16. PNC Financial Services (NYSE:PNC) operates in 28 states and has 2,500 branches across the country. PNC Financial Services (NYSE:PNC) logged $4.78 billion and $33.54 billion in trailing 12-month net income and revenue, as of June 30.
1. Banks (Money Center)
Industry Net Margin (2024): 30.89%
The banking industry (money center) ranks first on our list of the most profitable industries in the United States in 2024. Money centers are diversified large banks often located in economic hubs. These banks primarily cater to the government, other banks, and large corporations. One of the biggest companies in this industry is JPMorgan Chase & Co. (NYSE:JPM), to name a few. The company is one of the largest banks in the United States and is headquartered in New York City and Delaware. It provides investment banking solutions, foreign exchange services, wealth planning, and commercial banking services to millions of customers, businesses of all sizes, institutions, and the government. JPMorgan Chase & Co. (NYSE:JPM) has a trailing 12-month net income of $52.22 billion and a trailing 12-month revenue of $265.87 billion, as of June 30. As of August 16, JPMorgan Chase & Co. (NYSE:JPM) has a market capitalization of $607.93 billion.
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Disclosure: None. This article was originally published at Insider Monkey.
