- AmEx Q4 profit rose 13% to $2.46 bn, yet EPS missed consensus.
- Spending by Gen‑Z and Millennials now exceeds Gen‑X for the first time.
- Expenses surged 10% YoY, pressuring margins.
- Platinum Card refresh adds a $400 dining credit but hikes the fee to $895.
- 2026 EPS guidance of $17.30‑$17.90 and a 16% dividend lift signal confidence.
- Potential relocation to 2 World Trade Center could reshape the balance sheet.
You missed the quiet warning hidden in AmEx’s Q4 results.
Why AmEx’s Profit Beat Still Fell Short of Expectations
American Express reported a fourth‑quarter profit of $2.46 billion, translating to $3.53 per share, a solid 13% increase year‑over‑year. However, analysts were looking for roughly $3.60 per share, leaving the stock down 3.8% in after‑hours trade. The shortfall stems from two primary sources: higher operating expenses and a modest dip in net interest income caused by a slightly softer credit‑card loan portfolio growth rate.
While the top line shines, the earnings‑per‑share (EPS) metric matters most to Wall Street. A miss, even by a few cents, can trigger algorithmic sell‑offs and erode short‑term confidence, especially in a high‑visibility name like AmEx.
How the Platinum Card Refresh Reshapes Revenue Streams
In September, AmEx rolled out a refreshed Platinum Card, tacking on a $400 annual dining credit while lifting the annual fee to $895. The move is designed to deepen premium‑member engagement and boost fee revenue, which now accounts for roughly 30% of total earnings.
Fee‑based income is less sensitive to interest‑rate swings and credit‑loss cycles, providing a more stable cash flow. Yet the higher fee could price out price‑sensitive affluent customers, potentially capping growth in that segment if the perceived value doesn’t keep pace.
Gen‑Z & Millennial Spend Surge: What It Means for the Credit Card Landscape
Chief Financial Officer Christophe Le Caillec disclosed that Gen‑Z and Millennial cardmembers collectively outspent Gen‑X for the first time. This generational shift is crucial: younger consumers prefer experiences over assets, driving higher spend on travel, dining, and digital services—categories where AmEx’s rewards ecosystem shines.
From an investment lens, this demographic tilt suggests a longer‑term tailwind. Younger cardholders tend to be more tech‑savvy, increasing adoption of AmEx’s contactless and mobile payment solutions, which can improve transaction‑level profitability (known as “interchange” earnings).
Expense Inflation: The 10% Rise and Its Impact on Margins
Operating costs climbed to $14.5 billion, a 10% YoY increase. The bulk of this rise is attributable to a $6.3 billion marketing spend—a 75% jump since 2019—and higher technology investment to sustain digital platforms.
While marketing fuels brand equity, the marginal return on each dollar spent must be scrutinized. If incremental spend does not translate into proportional fee or interest income, profit margins could be squeezed, especially if macro‑economic headwinds dampen discretionary spending.
Technical Outlook: 2026 EPS Guidance and Dividend Upgrade
AmEx projects 2026 earnings per share between $17.30 and $17.90, representing a compound annual growth rate (CAGR) of roughly 12% from the current $3.53. Additionally, the quarterly dividend is set to rise from $0.82 to $0.95 per share, a 16% uplift.
For dividend‑focused investors, the higher payout enhances yield, currently hovering around 2.8% based on the $0.95 quarterly distribution. However, the sustainability of this dividend hinges on free cash flow generation, which will be tested by the continued expense expansion and the capital intensity of the proposed headquarters move.
Strategic Real Estate Move: AmEx’s Potential 2 World Trade Center Relocation
AmEx is reportedly nearing an anchor‑tenant agreement for 2 World Trade Center. Securing space in this iconic tower would provide a prestige boost and potentially favorable lease terms, but the deal remains subject to Port Authority approval.
From a balance‑sheet perspective, relocating could free up capital tied in existing lease obligations, allowing reallocation toward higher‑return initiatives such as technology upgrades or strategic acquisitions. Conversely, upfront relocation costs and potential construction‑related contingencies could temporarily depress cash reserves.
Investor Playbook: Bull vs. Bear Cases
Bull Case: The premium‑segment fee expansion, strong generational spend shift, and robust dividend hike create a compelling growth narrative. If marketing spend translates into higher card‑member acquisition and increased fee revenue, EPS could comfortably beat the $17.30‑$17.90 guidance, propelling the stock toward a 20% upside.
Bear Case: Persistent expense inflation, a narrower margin on interest income, and the risk that the Platinum fee hike alienates high‑value customers could erode profitability. Combined with uncertainty around the World Trade Center lease, a miss on 2026 guidance could trigger a 15% downside.
Investors should monitor three leading indicators over the next quarters: (1) fee‑revenue growth rate, (2) net‑interest margin trends, and (3) capital‑allocation efficiency of the $6.3 billion marketing spend. Positioning—whether overweight, underweight, or neutral—should be calibrated to how these metrics align with the bull‑bear narratives outlined above.