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

American Express is showing fee-led growth despite macro worries: Q1 2026 revenue rose 11% YoY while card fees (14.5% of total) grew 18% and EPS increased 18% to $4.28. Billed business was up 10%, and the Street expects Q2 EPS of $4.40 (+7.8% YoY) when results come July 24. The article argues the fee-based, more “subscription-like” model should be more resilient than swipe-based peers, and notes AXP trades at a lower valuation multiple than Visa (21x vs 31x TTM sales).

Analysis

AXP is behaving less like a pure transaction processor and more like a recurring-revenue consumer brand, which is why the stock can outperform even if macro spending cools. The market still discounts it as a cyclical payments name, but fee-led revenue has a much higher operating leverage profile than swipe-driven peers, so modest retention and renewal gains can support EPS even with flat-to-slower volumes. Relative loser: V, where the revenue model is more exposed to transaction velocity and less able to self-insulate if consumers trade down or reduce discretionary swipes.

The key catalyst is the next earnings print and, more importantly, management’s tone on fee mix, delinquency normalization, and acquisition costs. Over the next 1-3 months, the stock can re-rate if card-fee growth keeps outpacing spend growth and reserve build stays contained; that would validate the “subscription” framework and justify premium multiples. Over 6-18 months, the younger-cardmember mix is a structural tailwind, but only if engagement translates into durable renewal economics rather than just headline account growth.

Contrarian risk: the market may be overpaying for resilience if current fee growth is simply a lagging effect of price increases and not a durable acceleration in customer lifetime value. The thesis is falsified if billed business slows materially, fee growth decelerates below spend growth, or management turns more cautious on forward consumer demand. In that case, AXP’s premium narrative compresses quickly, while V should hold up better on a relative basis if payments volume proves more elastic than feared.

Key Decisions for Investors

• Go modest long AXP / short V into the July 24 earnings window: best risk/reward is a relative re-rating trade if fee growth and margin commentary stay strong; stop if V outperforms AXP by 5-7% post-print.
• If entering outright, prefer buying AXP on any 2-4% pre-earnings pullback rather than chasing; the setup is better as a hold-through-event than a momentum add given limited upside versus narrative risk.
• Use an AXP call spread rather than naked calls if implied vol is elevated into earnings; target a 1.5-2.0x payoff if the market starts valuing AXP more like a sticky subscription business than a cyclical lender.
• Watch item: if Q2 commentary shows fee growth still > spend growth but delinquencies/reserve build begin to inflect, trim rather than add—this is where the market will start pricing the next leg down.