The S&P 500's profit margin growth over the past five years has been driven largely by tech, and one name in particular: Apple. Unfortunately for the market and for Apple, the days of exceptional expansion may be over.
That's according to David Kostin of Goldman Sachs, who wrote in a note Monday to clients that he expects margins to remain flat at 9.1 percent for 2016 and 2017.
"Many of the drivers of margin expansion during the past few decades appear to be behind us," Kostin wrote, listing former catalysts such as lower interest rates, lower taxes, a switch from manufacturing to services and technological innovations.
Since 2009, information technology has been responsible for about 48 percent of overall S&P 500 margin expansion. Apple alone has been responsible for 18 percent.
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But the next two years will likely see some new stars, according to Kostin's list of S&P companies expected to increase profit margins in both 2016 and 2017. Names such as Priceline, Netflix, TripAdvisor and Amazon are expected to increase margins by at least 100 basis points. Topping the tech list are Adobe, PayPal and Alphabet.
In comparison, Kostin expects Apple's profit margins to fall by 9 basis points in 2016 and grow by 30 basis points in 2017.
According to BK Asset Management's Boris Schlossberg, Apple's "lack of gusto" when it comes to profit margins is a result of unsatisfactory products, aside from the new iPhone.
"At this point, the watch is a bust, TV is a bust, the big iPad is not really flying off the shelves," Schlossberg said Tuesday on CNBC's "Trading Nation." "I don't see any other place where they're going to be able to get the kind of margin expansion that they've been able to get for the last five years."
And while Apple is up 7 percent for the year, Schlossberg said investors may be losing enthusiasm for the stock as well, at least compared with other tech outperformers this year.
But the broader market will also face problems now that companies have reached peak potential for squeezing out profits, said Larry McDonald of Societe Generale.
"The amount of creativity that CFOs have used to expand margins the last five years is something we've never seen and it's highly, highly unsustainable," McDonald told "Trading Nation" on Tuesday. "You can only do so much to expand margins."