AI is increasingly driving market profitability: The S&P 500's net profit margin excluding financials is up to a record ~15%. At the same time, the S&P 500's net margin excluding the Magnificent 7 and tech is down to ~8%, near the lowest since the 2020 pandemic. This marks a ~7 percentage point gap between tech and non-tech sectors, the widest on record. This comes as margins for companies outside of tech have been trending down since 2022. Meanwhile, Magnificent 7 and tech firms have seen a rapid increase in margins over the last several quarters. AI is all that matters right now.(The Kobeissi Letter)