American Express (AXP) saw its stock fall 1.4% in premarket trading on Friday, even after beating expectations in its second-quarter earnings report and raising its revenue growth forecast for 2026 to 10%. The company’s Q2 revenue climbed 10% year-over-year, reaching $19.6 billion, just shy of the $19.7 billion analysts had estimated. Meanwhile, earnings per share surged 11% to $4.53, beating the $4.40 consensus estimate.
Strong Billed Business and Improving Credit Quality
Spending on AmEx cards, tracked as billed business, rose 9% to $455.8 billion, slightly surpassing estimates. This uplift was driven primarily by travel and dining categories, which continue to show resilience among the company’s affluent clientele. Customer spending in these areas has remained solid despite overall consumer sentiment wavering due to inflation and living costs.
Credit quality also showed positive signs. Provisions for credit losses dropped from $1.4 billion a year ago to $1.1 billion this quarter. This decline reflects increased confidence that cardholders will maintain their payments, a reassuring signal for lenders, especially given AmEx’s focus on higher-income customers who have been less affected by current economic challenges.
Outlook and Market Reaction
CEO Stephen Squeri expressed optimism about the company’s trajectory, noting stronger momentum than anticipated entering the second half of the year. Investments in value propositions appear to be fueling both spend and revenue growth. The updated full-year 2026 revenue forecast of 10% aligns with Wall Street expectations, but profit growth guidance was held steady, which might explain why the stock did not respond more positively.
American Express’s earnings are often seen as a bellwether for affluent consumer behavior, providing early clues before other card issuers report. The steady performance in premium spending categories suggests that this segment is still willing to open their wallets amid economic uncertainty.
