American Express lifted its profit forecast for 2026 on Friday after third-quarter results showed that affluent customers continue to spend heavily on travel, with airline purchases jumping 13% from a year earlier. The card giant reported total billed business of $454 billion, up 8%, and revenue of $20.1 billion, a 9% gain. Adjusted earnings came in at $4.68 per share, topping the roughly $4.48 that analysts had expected.
The company now expects full-year adjusted earnings of $17.60 to $17.90 per share, with the midpoint slightly above the consensus compiled by LSEG. That guidance upgrade signals management's confidence that spending by higher-income cardholders will remain resilient even as the broader economy cools.
Why airline spending matters
Airline purchases are a key driver for American Express because travel and entertainment spending tends to be among the most profitable categories for card issuers. In the quarter, travel and entertainment spending rose 10% year over year, helping to offset softer growth in other areas.
But the 13% surge in airline spending wasn't just about more people flying. Chief Financial Officer Christophe Le Caillec told Reuters that bigger average ticket sizes and fare increases played a role, as airlines raised prices to cope with higher fuel costs. That distinction matters: when prices rise, card spending can look stronger in dollar terms even if the number of transactions isn't growing as fast.
For American Express, that means a larger slice of each purchase flows through its network, mechanically boosting fee revenue. However, travel-heavy spending often carries higher reward costs and payments to airline partners, which can eat into margins. So while a 13% jump in airline spend can lift the top line, it doesn't automatically translate into fatter profits.
What it means for investors
The market's reaction on Friday was telling. Despite the earnings beat and raised guidance, American Express shares slipped 1.3% in premarket trading. That pattern — a stock falling after a strong report — has shown up repeatedly after the company's earnings beats, according to analysts at Truist, a US bank.
Investors often focus less on headline numbers like billed business or earnings per share and more on the quality of that growth. If spending is being inflated by higher prices rather than more transactions, the mix may not be expanding profitability as much as the raw figures suggest. That's why the market can react "backwards" on earnings days.
For everyday investors, the key takeaway is that American Express remains a bellwether for consumer spending, particularly among higher-income households. Its results offer a window into how the economy is holding up, especially in discretionary areas like travel. The company's ability to raise its profit outlook suggests that its core customer base is still spending, but the stock's muted reaction highlights the importance of looking beyond the headline numbers.
American Express's performance also contrasts with other recent earnings reports. For instance, Infosys trimmed its growth outlook as pricing pressure hit its North America business, while Dr Reddy's beat profit forecasts despite a US sales slump. These mixed signals underscore the uneven nature of the current economic environment.
Looking ahead, investors will be watching whether airline spending growth can persist and whether the company can maintain its premium customer base. The raised 2026 outlook suggests management sees continued strength, but the market's cautious reaction serves as a reminder that not all revenue growth is created equal.
