As the US economy navigates the challenges of high inflation and geopolitical tensions, American Express's (AXP.US) affluent customer base continues to demonstrate spending resilience. The premium credit card-focused financial giant delivered a mixed quarterly report before Friday's market open, with earnings per share of $4.53 surpassing expectations by $0.13, but revenue of $196.4 billion slightly missing the consensus estimate of $196.9 billion. Despite net profit rising 8% year-over-year to $31.1 billion and card member spending hitting a three-year high, the market reacted with a pre-market decline of over 3%, driven by the slight revenue shortfall.

Core Financial Metrics: EPS Beats Estimates, Full-Year Revenue Guidance Raised

For the second quarter ending June 30, American Express reported net profit of $31.1 billion, up 8% from $28.85 billion in the same period last year. Diluted earnings per share (EPS) rose 11% to $4.53, exceeding analyst expectations of $4.40. Total revenue, net of interest expense, increased 10% to $196.37 billion, marginally below the market forecast of $196.9 billion. Card member spending, adjusted for currency fluctuations, grew 9% to $455.8 billion, marking the highest growth rate in three years. The provision for credit losses fell to $1.1 billion from $1.4 billion a year earlier, reflecting improved credit quality. The net charge-off rate remained stable at 2.0%, unchanged from the prior year. Total operating expenses rose 12% to $14.5 billion, driven by higher customer engagement costs linked to increased card member spending, the revamp of the US Platinum Card, and higher utilization of card member benefits. The effective tax rate increased to 23.6% from 18.7% last year, primarily due to a one-time tax benefit in the prior-year period.

High-End Consumer Engine: 9% Billings Growth Hits Three-Year High

Amidst the current K-shaped economic recovery in the US, American Express's business model, centered on affluent customers, demonstrates strong defensive characteristics. Card member spending, adjusted for currency, grew 9% to $455.8 billion, the highest growth rate in three years. The company has recently concentrated its marketing resources on the Platinum Card, which carries an annual fee of $895, moving away from no-annual-fee cashback cards. In the first quarter of 2026, 73% of the 3.1 million new cards issued were annual fee products. This premium strategy is translating into tangible results, with first-quarter revenue (now including higher annual fees) up 11% and EPS up 18%. CEO Stephen Squeri stated, "We had another excellent quarter with revenue growth of 10%, EPS of $4.53, and card member spending growth of 9%—the highest FX-adjusted growth in three years."

Full-Year Guidance Raised: Revenue Growth Target Increased to 10%

Based on better-than-expected first-half performance, American Express has raised its full-year 2026 revenue growth guidance to 10%, up from the previous range of 9% to 10%. The company also reaffirmed its full-year EPS forecast, unchanged at $17.30 to $17.90. Market consensus for full-year revenue had been around 9.8%. This upgrade reflects management's confidence in sustained high-end consumer spending in the second half. However, Squeri noted that the company will continue to increase investments in marketing and technology to support long-term growth, which could limit near-term margin expansion.

Market Reaction: Pre-Market Shares Fall Over 3% on Slight Revenue Miss

Despite the EPS beat, raised full-year guidance, and three-year high spending growth, American Express shares declined over 3% in pre-market trading. This seemingly contradictory reaction reveals two key investor concerns. First, the symbolic significance of the revenue miss. While the actual revenue of $196.4 billion was just 0.25% below the expected $196.9 billion, in the current environment of high macroeconomic uncertainty, any negative signal can be amplified. The market is highly vigilant about whether consumer spending momentum has peaked. Second, the impact of rising costs on profits. Total operating expenses grew 12%, outpacing the 10% revenue growth. Higher customer engagement costs, investments in the Platinum Card revamp, and increased benefit utilization are squeezing profit margins. Zacks analysts had previously warned that rising customer engagement costs tied to increased card member spending and higher utilization of travel and lifestyle benefits could compress margins. As of July 23, American Express shares closed at $340.84, down approximately 5.7% year-to-date. The average 12-month price target from 22 Wall Street analysts is $373.48, implying about 12.6% upside. On July 13, JPMorgan upgraded the stock from Neutral to Overweight, raising its price target from $328 to $400. On the same day, UBS increased its target from $340 to $386.

Strategic Move: $700 Million Acquisition of TheFork to Strengthen European Dining Ecosystem

Alongside its earnings report, American Express announced plans to acquire TheFork, a European restaurant booking platform, for $700 million. TheFork connects over 50,000 restaurants across 11 European countries. The transaction is expected to close by the end of 2026, subject to regulatory approval. This acquisition extends American Express's strategic focus on the premium dining sector. The company has previously acquired digital dining platforms Resy and Tock. TheFork's integration will expand its European restaurant service coverage to 50,000 venues, further strengthening its "premium travel + fine dining" benefits ecosystem. As competition in the premium credit card market intensifies, dining benefits have become a key differentiator for high-end cards. Through continued acquisitions and integration of dining technology platforms, American Express is building a competitive moat that rivals may find difficult to replicate.

Industry Comparison and Macro Context: Advantages of the Premium Positioning

Compared to competitors serving broader customer bases, American Express's premium positioning offers distinct advantages in the current macroeconomic environment. Visa reported net revenue growth of 17% to $11.2 billion in its fiscal second quarter ended March 31, 2026. Mastercard posted net revenue growth of 16% to $8.398 billion over the same period. All three credit card giants have benefited from the resilience of US consumer spending, with total credit and debit card spending rising 6.3% in June, the strongest growth in over four years. However, American Express's provision for credit losses of $1.1 billion fell 21% year-over-year, while its net charge-off rate remained stable at 2.0%. This data highlights the relative advantage of its high-credit-quality customer base amid macroeconomic uncertainty. The Atlas x Pave Consumer Health Index indicates that the financial buffer for US households has fallen to a two-year low, but for American Express's affluent clientele, this trend has a far smaller impact than for mass-market credit card issuers.