First-quarter earnings season is nearly over, so it is time to list companies that have increased revenue the most while also improving their profit margins. Investors should consider both elements, because a corporate management team might be paying a high price to gain market share.

Publicly traded U.S. companies report their results quarterly, but earnings season isn't rigidly defined because reporting periods can vary. Among companies in the S&P 500 SPX, 27% of them have fiscal reporting periods that don't match the calendar.

Through Tuesday, 90% of the S&P 500 had reported results for fiscal quarters ended Feb. 15 or later, according to data provided by FactSet. Companies that report late each earnings season include Nvidia (NVDA), which is scheduled to announce results for the first quarter of its fiscal 2027 on May 20.

Let's begin by listing the 20 companies in the S&P 500 that have reported so far this earnings season and have shown the largest increases in quarterly sales per share while also improving their gross profit margins and their operating margins. These terms are all defined below the table.

Here is how we screened the 452 companies among the S&P 500 that had reported first-quarter results through Tuesday:

-- Increased quarterly sales per share from the year-earlier quarter. We screened for changes in sales per share rather than raw revenue to incorporate the effects of dilution when shares are issued and the opposite when shares are repurchased. A company's revenue will increase if it acquires a competitor. But if it issues stock to help pay for the acquisition, the ownership stakes of investors who hold the stock before the acquisition are diluted. The per-share figure illustrates how much of the revenue increase is "available" to investors who held the acquiring company's stock before the new shares were issued. If the share count is reduced through stock repurchases, sales per share will increase more rapidly than revenue. All per-share figures are adjusted by FactSet for any stock splits or spinoffs.

-- Improved gross profit margins. A company's gross margin is its net sales minus the cost of goods or services sold, divided by sales. Net sales are sales minus returns and discounts, such as coupons. The cost of goods or services sold includes the actual expenses when making the items or providing the services. Gross margin is a measurement of pricing power and core efficiency.

-- Improved operating margins. A company's operating margin incorporates more overhead and other expenses that aren't tied directly to the production of goods and services. It can be summarized as earnings before interest and taxes, divided by sales.

Profit margins vary by industry. A manufacturer of agricultural equipment will tend to have lower margins than a mature software company, for example. So comparisons may be most useful between companies with similar business models.

A combination of sales growth and improving gross and operating margins is a good sign for any company. It indicates the company isn't being forced to offer discounts to defend its market share.

Gross-margin and operating-margin figures aren't available for many companies in the financial sector, as banks and insurers have their own industry-based measures of profitability. For some companies, operating margins weren't available for the most recent reported quarters because their earnings press releases didn't include enough information for FactSet to calculate the margins.

On a list dominated by technology companies, Super Micro $(SMCI)$ stands out with relatively low profit margins. But investors cheered Super Micro's margin improvement after it reported its quarterly results on May 5.

Most stock sectors have been rising while price/earnings valuations have declined - the financial sector looks cheap

Over the years, investors have been repeatedly warned about the high level of concentration in the S&P 500 index. Three companies - Nvidia, Apple $(AAPL)$ and Microsoft $(MSFT)$ - make up 20% of the State Street SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 by holding all its stocks weighted by market capitalization.

The top 10 components of the S&P 500 make up 41% of the index. This is close to the peak concentration level for the index, according to data going back to 1972 tracked by Ned Davis Research.

Another warning you may have seen over the years is that the S&P 500 was trading high on a forward P/E basis relative to historical averages. At the end of 2025, the S&P's weighted ratio of price to rolling consensus 12-month earnings-per-share estimates among analysts polled by FactSet was 22.2, compared with what was then a five-year average forward P/E of 20.4 and 10-year average forward P/E of 19.2.

This earnings season's big winners include makers of AI-oriented hardware, but the list also includes some surprises

These are three of the companies showing the largest increases in quarterly sales this earnings season, while also expanding gross profit margins and operating margins.

First-quarter earnings season is nearly over, so it is time to list companies that have increased revenue the most while also improving their profit margins. Investors should consider both elements, because a corporate management team might be paying a high price to gain market share.

Publicly traded U.S. companies report their results quarterly, but earnings season isn't rigidly defined because reporting periods can vary. Among companies in the S&P 500 SPX, 27% of them have fiscal reporting periods that don't match the calendar.

Through Tuesday, 90% of the S&P 500 had reported results for fiscal quarters ended Feb. 15 or later, according to data provided by FactSet. Companies that report late each earnings season include Nvidia (NVDA), which is scheduled to announce results for the first quarter of its fiscal 2027 on May 20.

Let's begin by listing the 20 companies in the S&P 500 that have reported so far this earnings season and have shown the largest increases in quarterly sales per share while also improving their gross profit margins and their operating margins. These terms are all defined below the table.

Here is how we screened the 452 companies among the S&P 500 that had reported first-quarter results through Tuesday:

-- Increased quarterly sales per share from the year-earlier quarter. We screened for changes in sales per share rather than raw revenue to incorporate the effects of dilution when shares are issued and the opposite when shares are repurchased. A company's revenue will increase if it acquires a competitor. But if it issues stock to help pay for the acquisition, the ownership stakes of investors who hold the stock before the acquisition are diluted. The per-share figure illustrates how much of the revenue increase is "available" to investors who held the acquiring company's stock before the new shares were issued. If the share count is reduced through stock repurchases, sales per share will increase more rapidly than revenue. All per-share figures are adjusted by FactSet for any stock splits or spinoffs.

-- Improved gross profit margins. A company's gross margin is its net sales minus the cost of goods or services sold, divided by sales. Net sales are sales minus returns and discounts, such as coupons. The cost of goods or services sold includes the actual expenses when making the items or providing the services. Gross margin is a measurement of pricing power and core efficiency.

-- Improved operating margins. A company's operating margin incorporates more overhead and other expenses that aren't tied directly to the production of goods and services. It can be summarized as earnings before interest and taxes, divided by sales.

Profit margins vary by industry. A manufacturer of agricultural equipment will tend to have lower margins than a mature software company, for example. So comparisons may be most useful between companies with similar business models.

A combination of sales growth and improving gross and operating margins is a good sign for any company. It indicates the company isn't being forced to offer discounts to defend its market share.

Gross-margin and operating-margin figures aren't available for many companies in the financial sector, as banks and insurers have their own industry-based measures of profitability. For some companies, operating margins weren't available for the most recent reported quarters because their earnings press releases didn't include enough information for FactSet to calculate the margins.

On a list dominated by technology companies, Super Micro (SMCI) stands out with relatively low profit margins. But investors cheered Super Micro's margin improvement after it reported its quarterly results on May 5.

Here is recent coverage from the MarketWatch technology team of some of the other companies on the list:

-- The latest sign of Sandisk's ascent - It's now bigger than the company that spun it off

-- Micron's stock soars to fresh highs as a 'virtuous cycle' for memory unfolds

-- Why is AMD's stock up so much? 'The world has changed.'

-- Palantir's stock falls despite upbeat earnings. Here are Wall Street's quibbles.

Most stock sectors have been rising while price/earnings valuations have declined - the financial sector looks cheap

Over the years, investors have been repeatedly warned about the high level of concentration in the S&P 500 index. Three companies - Nvidia, Apple (AAPL) and Microsoft (MSFT) - make up 20% of the State Street SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 by holding all its stocks weighted by market capitalization.

The top 10 components of the S&P 500 make up 41% of the index. This is close to the peak concentration level for the index, according to data going back to 1972 tracked by Ned Davis Research.

Another warning you may have seen over the years is that the S&P 500 was trading high on a forward P/E basis relative to historical averages. At the end of 2025, the S&P's weighted ratio of price to rolling consensus 12-month earnings-per-share estimates among analysts polled by FactSet was 22.2, compared with what was then a five-year average forward P/E of 20.4 and 10-year average forward P/E of 19.2.

But the S&P 500's forward P/E had declined to 21.4 at Tuesday's close, even though the index had gained 8% for 2026, because weighted earnings estimates had increased more quickly than weighted share prices. And despite the index's high concentration in a small number of companies, forward P/E ratios were down for seven of its 11 sectors.

The S&P 500 sectors are listed in alphabetical order with the full index at the bottom. All sectors trade at lower forward P/E than they did at the end of 2025, except for the consumer staples, Industrial, real estate and utilities sectors.

The energy sector has shown the largest gain this year, which is hardly surprising given that the price of continuous front-month contracts for West Texas Intermediate crude oil (CL00) was up 78% for 2026 as of early Wednesday. The sector is among the most expensive relative to its five-year forward P/E valuation. But its forward P/E has declined to 14 from 16 at the end of 2025.

The financial sector is down 6% for 2026, and its forward P/E has declined to 14.4 from 16.3 at the end of December. This sector is the least expensive one relative to its five-year average forward P/E, as shown in the table.

So let's look at our list of 20 earnings-season winners again, leaving them in the same order, this time showing current forward P/E ratios and those as of Dec. 31, to see how the "P" and the "E" have moved. The price changes exclude dividends.

Sandisk, which tops the list, illustrates how some companies' forward P/E ratios have come down. The share price was up more than fivefold for 2026 through Thursday, but the rolling 12-month consensus EPS estimated had increased even more quickly.