American Express (AXP) shares fell over 5% on Friday even after the company reported second-quarter results that topped Wall Street estimates and raised its full-year revenue growth forecast. The decline was driven by a sharp rise in operating expenses, as younger cardholders enthusiastically maximize premium benefits.
AmEx posted Q2 revenue of $19.6 billion, up 10% year-over-year, and earnings per share of $4.53, beating the $4.40 consensus. Billed business—total spending on AmEx cards—rose 9% to $455.8 billion. The company added 3 million new proprietary cards, with over three-quarters opting for high-fee accounts, primarily from Gen Z and Millennial demographics.
However, total quarterly operating expenses jumped 12% compared to a year earlier, fueled by a surge in card member services costs such as airport lounge visits, hotel credits, and dining stipends. While the average card member spent $6,759 in Q2 (up from $6,393), the cost of fulfilling premium benefits is proving far more expensive than anticipated.
Management raised the 2026 revenue growth guidance to approximately 10% but kept the earnings-per-share forecast unchanged at $17.30 to $17.90, disappointing investors concerned about margin compression. Credit quality remained strong, with net write-offs at a modest 2% and credit loss provisions falling to $1.1 billion from $1.4 billion a year ago.
Despite the sell-off, Wall Street maintains an Overweight rating on AmEx with an average price target of $378, signaling a belief that the long-term acquisition strategy may pay off. However, the near-term focus remains on whether expense growth will continue to outpace revenue gains if consumer spending cools.
