American Express Beats EPS But Keeps Up Big Reinvestment Plan, Stock Falls
The company will sustain higher marketing and technology spending through 2026 to grow premium cardholders, a choice that has raised investor concern over near-term profit tradeoffs.
Overview
- American Express reported second-quarter EPS of $4.53, beating expectations, and revenue net of interest of about $19.6 billion, roughly 10% year-over-year growth.
- Quarterly operating expenses rose about 12% to $14.5 billion, driven in part by a roughly 9% increase in card-member marketing costs.
- CFO Christophe Le Caillec told analysts the elevated expense run-rate will persist through the end of 2026 as the company reinvests earnings in marketing, technology and premium products.
- Investors reacted negatively to the decision to prioritize reinvestment over near-term boosts to earnings or buybacks, sending the stock down several percentage points after the report.
- AmEx’s mix of card fees, premium-cardholder growth and improved credit provisions gives it room to invest, but the company’s issuer-and-bank business model also means higher near-term costs can affect short-term valuation differently than network-only peers.