American Express Reports Earnings on July 24. Here's Why Card-Fee Growth Matters More Than Spending This Quarter.

American Express is showing resilience as card fees outpace spending, with 2026 Q1 revenue up 11% YoY and card fees increasing 18% (14.5% of total) despite a challenging macro backdrop. EPS rose 18% to $4.28, while Street expects $4.40 for 2Q (+7.8% YoY) ahead of the July 24 earnings report. The article also frames AXP as potentially undervalued versus Visa on valuation (21x vs. 31x trailing sales), supporting a modestly positive setup into earnings.

Analysis

The market is still treating this like a consumer-credit beta, but the more important mechanism is mix: AXP is increasingly monetizing membership and engagement, not just swipe volume. That makes the earnings stream less cyclical than V, and it also means the first derivative to watch is fee retention and attach rate, not billed business alone. The flip side is that if affluent discretionary spend rolls over, the company can still look fine for a quarter or two while rewards costs and acquisition spend quietly compress future margins.

The near-term catalyst is July earnings, where the setup is less about headline growth and more about whether fee growth keeps outpacing spend growth. If that persists, it supports a higher quality multiple; if it decelerates, the market will likely reprice the stock as a mature payments name rather than a subscription compounder. Over the next 1-3 months, delinquency trends are the key falsifier: affluent cohorts usually lag the macro, so any deterioration there would be a stronger signal than macro commentary.

Second-order, the competitive pressure is on premium ecosystems, not just cards: JPM and COF can defend share only by spending harder on rewards, which can erode returns if AXP keeps winning younger users. Visa is the cleaner beneficiary of any broad spend rebound, but it is also the more exposed name if consumers trade down and transaction growth cools. The contrarian view is that the resilience story may be partly priced in already; unless earnings confirm fee durability, this can remain a quality stock without being a great stock for the next 1-3 months.

Key Decisions for Investors

• Add AXP only on post-earnings confirmation: if card-fee growth again exceeds spend growth and management does not soften 2H guidance, use any 3-5% pullback to build a 3-6 month long.
• Pair trade idea: long AXP / short V for a 1-3 month relative-value trade if you want to express a slowdown view; thesis is AXP’s fee engine should hold up better than V’s pure volume sensitivity.
• Do not chase into earnings if implied optimism is already elevated; instead, treat July 24 as a data gate. Falsifier: any miss on EPS/guidance paired with rising delinquencies or higher reward expense ratio.
• Watch JPM and COF as competitive pressure gauges over the next quarter; if they raise premium-card rewards or acquisition spend, that is a warning that AXP’s younger-card growth is becoming less profitable.
• If macro data re-accelerates consumer spend, rotate out of the defensive AXP stance and back toward V/XLF, since AXP’s relative advantage narrows when transaction growth, not fee resilience, drives the tape.