Investors might be worried about a return of high inflation amid a conflict in the Middle East, but American Express says there’s no signs of slowdown.
Reporting its earnings this morning, the credit giant continued to ride the coattails of a spendthrift U.S. public, with spending accelerating and higher annual fees helping the company deliver double-digit revenue and profit growth:
- Revenue: $18.91 billion, +11% YoY (vs. $18.62 billion expected)
- Earnings per share: $4.28, +18% YoY (vs. $4.03)
The company also reiterated its 2026 sales outlook, anticipating growth of 9% to 10%. It also laid out earnings per share outlook of $17.30 to $17.90, within investors’ guidance.
However, despite that, the company’s stock fell over 4% on Thursday. That’s especially jarring, considering the company’s retention and still-strong spending growth.
American affluents continue to spend
Amex CEO Stephen Squeri remarked at the impressive strides in discretionary spending, telling Yahoo Finance that the company’s cardholders clearly “don’t care about gas prices.”
The company’s chief executive highlighted strong spending by cardholders. Luxury goods (+18% year-over-year), premium airline cabin (+12%), and retail (+11%) spending all rose by double-digits, while restaurant sales (+9%) came up just short of double-digits.
In fact, Amex’s card member spending grew 9% in the first quarter, marking the fastest growth in three years. That tells a pretty clear story about affluent spenders. Similar commentary by Delta CEO Ed Bastian, which has a co-branded card issued by Amex seems to support this thinking despite general economic malaise in the country.
However, maybe one point of worry is that air travel spending has been slowing amid higher airfares, at least according to Bloomberg.
Amex flexes its ecosystem muscle
Late last year, the company did a makeover of its American Express Consumer Platinum Card product, which came with a series of new and supersized credits in Amex’s own ecosystem.
In other words, rather than offer additional credits as part of brand partnerships, Amex’s upgrades to its card products have increasingly hinged on its own products.
Those appear to be paying off on its consumer cards, with year-over-year growth across lodging, restaurants, and airlines outstripping the baseline spending:
- Fine Hotels + Resorts and The Hotel Collection spending grew 50%
- U.S. Resy Restaurants saw a 20% increase in spending
- Member Airfares booked on Amex Travel grew 21%
In its quarterly presentation, the company observes that Card Member Service Expense did rise 49% year-over-year, “primarily due to higher usage of Card Member benefits and the new U.S. Platinum benefits.”
However, you’d have to assume that’s good for Amex, seeing how cardholders are actually spending credits from higher annual fee cards. And in doing so, they’re possibly building more durable relationships with the creditor’s various products.
The problem is spending (by the company)
One point of serious strength for American Express is its ability to get cardholders to shell out on annual fees. In the latest quarter, net card fees rose 18% year-over-year, a factor which has surely been aided by recent hikes to card annual fees.
The Consumer American Express Platinum Card is now $895/yr. The Consumer Gold is now $325/yr. And, for the most part, it looks like cardmembers are keeping the cards.
However, there did appear to be one point of contention in the company’s earnings: a suggestion it would increase marketing and technology spend to “capitalize on long-term growth opportunities.”
At face, there’s nothing problematic with the statement. However, investors might be taking that to mean that American Express needs to spend more money to acquire customers or stay competitive in the technology game.
Domestic consumer additions have slowed
The former is arguably more of a problem. Spending more on marketing could mean that the company is struggling to add new cards. This appears to be most worrisome in the domestic market, where the heftiest annual fees are earned.
In recent quarters, there has been a decline in new U.S. Consumer card additions. They were consistently at about 1.5 million per quarter, before declining to 1.3 million per quarter in Q4 2025 and Q1 2026. That might not sound so troubling, but that’s a double-digit decline; it also coincided with the higher Platinum Card annual fee.
Of course, total new proprietary card additions from corporates and the international market have helped pick up the slack, staying mostly in line at 3.1 million, but if U.S. additions require more attention, it’s understandable that investors would be worried about possible impacts.
There are the (typical) AI worries
Every enterprise is grappling with the impacts of AI, real and imaginary. Increasingly, the spending component is a quarrelsome part of that grappling.
If Amex is planning investments in technology, it could come in two flavors. The first is just modernization. On its Q4 earnings call, Squeri said that the company spends over $5 billion per year and is rolling out new processes to keep them efficient.
However, the second layer could be investment. The company’s Amex Ventures has made over a hundred investments since 2011 and has been playing an even bigger role in the private market as of late.
It also has been taking out entire firms, where appropriate. Last week, American Express announced the acquisition of Sam Altman-backed Hyper, “adding to its AI expertise and expense management capabilities.”
Anyway, you cut that, it’s going to require spending internally. And what is spent is not received by shareholders.
They might have wanted more
That’s all to say that investors might be worried about what is left over for them; less cash to go around means less buybacks or dividend increases.
That surely played a role in today’s tumult. When it was all said and done, Amex stock fell 4.3% on Thursday. However, fretting the day-to-day moves of the stock isn’t worth much unless you believe that Amex’s impressive row of growth is facing trouble.
