American Express Q2 Earnings: Card-Fee Growth Outpaces Spending

American Express (NYSE: AXP) shares have declined this year as investors weigh rising interest rates, inflation, and oil price volatility against broader economic uncertainty. Nevertheless, the Warren Buffett‑favored firm continues to exhibit solid growth and operational momentum. The key question is whether the current market concerns are justified.

Card‑fee expansion is a more critical driver than raw transaction volume ahead of the company’s second‑quarter earnings release scheduled for July 24.

Although American Express is not the world’s largest payment network, it focuses on affluent consumers who spend more heavily. Its predominantly fee‑based card portfolio attracts higher‑income users, and despite having 155.9 million cards outstanding, its revenue surpasses that of Visa (NYSE: V), which processes roughly 5 billion cards globally.

This approach delivers resilience in stressed economic conditions by generating recurring revenue that directly boosts profitability. Cardholders continue to pay annual fees regardless of overall spending levels, and the fee‑based structure has historically cushioned the company during periods of reduced transaction activity.

Performance has remained strong amid a challenging macroeconomic backdrop. In the first quarter of 2026, revenue rose 11% year‑over‑year, with card fees — representing 14.5% of total revenue — growing 18%. Billed volume increased 10%, and EPS climbed 18% to $4.28; analysts project EPS of $4.40 for the upcoming second quarter, reflecting a 7.8% YoY gain.

An Inflation‑Resilient Business Model

This model delivers resilience in stressed economic conditions by generating recurring revenue that directly boosts profitability. Cardholders continue to pay annual fees regardless of overall spending levels, and the fee‑based structure has historically cushioned the company during periods of reduced transaction activity.

Although American Express is not the world’s largest payment network, it focuses on affluent consumers who spend more heavily. Its predominantly fee‑based card portfolio attracts higher‑income users, and despite having 155.9 million cards outstanding, its revenue surpasses that of Visa (NYSE: V), which processes roughly 5 billion cards globally.

Emerging Growth Drivers

A key growth lever is the company’s successful appeal to younger consumers who adopt a long‑term relationship with the brand. Millennials represented 30% of the card base in Q1, up 13%, while Gen‑Z cardmembers accounted for 6% but grew 38%, compared with a modest 8% increase among Gen‑X members. These cohorts are expected to drive sustained growth as they continue to engage, pay annual fees, and increase spending.

American Express is evolving into a subscription‑oriented model rather than a pure volume play, enabling it to weather economic headwinds more effectively than a swipe‑based competitor like Visa. While Visa’s revenue scales directly with transaction volume, Amex’s higher‑margin fees allow it to maintain profitability even as transaction frequency fluctuates.

Moreover, the stock trades at a lower multiple — approximately 21 times trailing‑12‑month sales versus 31 times for Visa — making it potentially undervalued relative to its subscription‑style revenue model, a factor that likely contributes to Warren Buffett’s strong endorsement.

Investment Considerations for American Express

Investors should evaluate the following factors before acquiring American Express shares:

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