American Express (AXP) Looks Solid Ahead of Q1 Earnings. Why Is It Still a Hold?

American Express (AXP) looks fundamentally solid heading into its Q1 earnings report, but the setup still lacks a clear catalyst to drive upside, supporting a Hold view. Beyond the headline numbers, spending remains resilient, and credit quality is stable, pointing to a healthy underlying business. However, without a reacceleration in billed business or a shift in the growth profile, the upside case remains limited.

With the global financial services company set to report on April 23, the market is currently expecting around 9.6% year-over-year growth in both earnings per share (EPS) and revenue, reflecting steady but unspectacular performance.

While we are not in the early stages of a cyclical economic expansion, which would typically benefit more rate-sensitive and higher-beta financials, the current environment also lacks the kind of acceleration that could materially lift Amex’s growth profile. In this context, the stock looks more like a Hold to me.

Billed Business Holds Up, but Fails to Reaccelerate

Generally speaking, rather than whether or not it beats Wall Street’s EPS and revenue estimates, American Express stock tends to move primarily based on a single dominant driver that the market reacts to most strongly: card member spending.

Also known as billed business, card member spending is the main driver of American Express’s top line. Since AXP is essentially a spend-centric model, this metric directly drives discount revenue or merchant fees and card fees. When spending is strong, it provides revenue visibility and operating leverage. Conversely, when spending weakens, especially in travel and leisure, multiple compression tend to follow.

In the latest print, for Q4 2025, billed business or card member spending grew 8% year-over-year, in line with the rest of FY25. Nothing bad here, but also no upside surprise. The issue is that for a stock trading at 21.4x trailing earnings, the lack of clear acceleration feels like a disappointment. After rising from 6% in Q1 2025 to 7% in the next quarter, and then stalling in the mid-single digits over recent periods, billed business growth has clearly lost momentum.

That starts to look more like a steady grower profile, which sits uncomfortably with a premium 21.4x multiple.

Credit Isn’t the Problem

The second most important point for the Amex thesis is credit performance. In Q4, American Express reported write-offs of $1.27 billion, up from $1.13 billion in the same period last year. However, the increase was moderate on a sequential basis and not out of line with the broader trend.

Provisions edged up to $1.41 billion in Q4 2025 from $1.28 billion in Q3 2025. The key detail, however, is that reserve build came in at just $141 million, compared to $222 million in Q2 2025. This doesn’t point to a spike in risk, but rather to a normal, volume-driven adjustment.

Furthermore, net interest income (NII) — the “banking” component of Amex’s model, including revolving credit and Pay Over Time — expanded 12% year-over-year, while loans grew 7% year-over-year and margins increased by 4%. This points to credit growth that is both profitable and controlled, without a proportional deterioration in quality. The more nuanced reading here is one of credit normalization, not deterioration. That, combined with stagnant billed business, has likely weighed on AXP’s recent performance.

Taken together, the FY26 guidance from American Express — with revenue expected to grow between 9% and 10%, and EPS in the range of $17.30 to $17.90, which is roughly 14% year-over-year growth — was broadly in line with expectations. As a result, there were little to no revisions to analysts’ models.

Q1 Outlook Points to Stability, Not Reacceleration

American Express is set to report its Q1 earnings on April 23, and the management team has been quite transparent — and notably bullish — on spending.

Using Bank of America’s (BAC) earnings, reported on April 15, as a proxy for consumer health, spending remains resilient, growing 5% year-over-year, with card spending up another 6% year-over-year. More importantly, growth is coming from travel, services, and retail. While Bank of America operates in the mass market and is seeing steady growth with no meaningful slowdown, Amex serves a more premium customer base. As a result, it is likely performing even better. As such, high single-digit growth in billed business for Amex remains the minimum expectation.

From a valuation perspective, AXP is currently trading at around 18.5x forward earnings, and it doesn’t hurt that the stock is still about 20% below its December peak. A multiple that has already decompressed suggests a lower bar for upside, while strong credit quality provides some downside cushion.

However, stable spending without clear acceleration does not offer a compelling upside narrative. In this context, a positive inflection would likely need to come from one of the key drivers. This could be a reacceleration in billed business growth or incremental upside from lending and NII. In the absence of these, the current “steady but not improving” setup could make the forward multiple look somewhat demanding.

Is AXP a Buy, According to Wall Street Analysts?

There is a clear split in Wall Street sentiment around American Express stock. Of the last 17 ratings issued, seven are Buy, nine are Hold, and one is Sell, resulting in a Moderate Buy consensus. The average target price, recently trimmed by several analysts, stands at $352.60, implying an upside of about 6.3% from current levels.

Not a High-Conviction Opportunity into Q1

The setup for Amex heading into Q1 remains somewhat uninspiring. Growth has yet to reaccelerate. While billed business growth remains solid, it hasn’t improved in recent quarters. Valuation has moderated from recent peaks, but it’s still elevated and requires catalysts. Credit normalization, although mild, is also playing out, with write-offs gradually moving higher — albeit still under control.

Taken together, it’s hard to see a clear inflection across these factors in the upcoming quarter. For now, I view AXP as a Hold. The overall picture remains solid, but it’s simply not a high-conviction opportunity at this stage.