The counterintuitive economics of smoking

Photograph: Alamy

Oct 26th 2025|San Francisco|2 min read

ONE HUNDRED dollars invested in the tech-heavy Nasdaq index in January 2024 would now be worth $160. If you had bought American tobacco companies, you would now have even more: some $165. The share-price boom in part reflects a strange economic phenomenon. In recent years, the operating margin on a cigarette sold in America has grown from about 50% to about 60%. This year cigarette- and cigar-makers are expected to make $22bn of operating profit in the world’s largest economy.