Strong Earnings Performance#
Goldman Sachs has reiterated its Buy rating on American Express (NYSE:AXP) after the company reported impressive first-quarter earnings for 2026. American Express announced earnings per share of $4.28, surpassing the expected $4.04 according to Visible Alpha Consensus Data. The company also reported revenue growth of 10% over the past year, showcasing its strong position in the consumer finance sector, with a market capitalization of $228 billion.
Revenue Drivers#
The stronger-than-expected revenue was primarily driven by increased discount revenue and net interest income. Discount revenue benefited from higher spending volumes, likely supported by favorable foreign exchange rates. Additionally, card fees rose by 18% year-over-year, exceeding analyst expectations. U.S. consumer billings also showed growth, increasing to 10% year-over-year, up from 9% in the previous quarter.
Card Acquisition and Engagement#
American Express acquired 3.1 million new cards during the quarter, which is an increase of 200,000 from the previous quarter but a decrease of 300,000 compared to the same period last year. The growth in new cards was driven by commercial services and international card services. However, cardmember engagement costs were higher than anticipated, coming in at 44.7%, compared to the consensus estimate of 44.0%.
Future Outlook and Strategic Moves#
The provision for credit losses was $90 million lower than expected, contributing to the earnings beat. American Express also repurchased $1.7 billion in shares, aligning with market expectations. In a strategic move, the company announced its agreement to acquire Hypercard, an AI-powered expense management firm, aiming to enhance its commercial services. This acquisition is expected to leverage AI technology to streamline business processes. Meanwhile, Bank of America Securities and Jefferies have also provided their ratings, with Bank of America maintaining a Buy rating and Jefferies holding a Hold rating, reflecting varied perspectives on the company's performance and future potential.