American Express Reports Stellar Q2 2025 Results

When American Express recently released its second quarter 2025 results on Friday, it wasn’t just another announcement of record-breaking revenue. It also provided an intriguing look into how wealthy Americans—the premium cardholders who form the backbone of their business—are navigating a shifting economic landscape. In short, the outlook appears quite strong.

The company reported a remarkable quarterly revenue of $17.9 billion, which signifies a 9% increase compared to last year. Total cardholder spending saw a notable jump of 7%, reaching a staggering $416.3 billion. Given that American Express skews heavily towards a wealthier clientele, these figures could act as indicators of Americans’ financial confidence and their willingness to spend.

This isn’t just about more spending; card members are exhibiting a growing interest in premium products and experiences. Critics have frequently pointed out the phenomenon surrounding “premium cards.” There has been ongoing debate over whether this might be overhyped. Nonetheless, American Express continues to enhance its offerings for affluent customers.

However, there are cautionary notes to consider. Costs surged by 14% year-on-year as the company reinvests in technology and bolsters risk management. A company representative noted, “the cost of variable customer engagement is high, driven by increased cardholder spending and the use of travel-related profits.” In essence, the enticing features associated with premium cards are straining some of Amex’s profit margins. Still, the card issuer has maintained its revenue growth forecast of 8%-10% and anticipates an annual earnings per share between $15 and $15.50.

During an analyst conference following the revenue announcement, executives delved into these dynamics. Interestingly, millennials and Gen Z seem particularly enthusiastic about the brand’s luxurious offerings. They are clearly interested in what premium cards provide.

Despite strong revenue figures, Amex’s stock, which hit record highs earlier this month, experienced a 2.6% drop in afternoon trading. Analyst Brian Foran from Truist Securities commented that some investors may be reassessing whether “good news is enough.” While the range of benefits that come with these premium cards can be alluring, the escalating costs tied to serving high-end clients raise concerns about the sustainability of this focus on wealthy customers.

Generational Wealth Trends

Spending among millennials rose by 10%, while surprisingly, Gen Z cardholders increased their spending by 40%, albeit from a smaller base. This generational shift bodes well for the premium card market. It seems that not just established wealth but also younger, upwardly mobile clients are embracing luxurious options.

The signs suggest these newer members are actively using their cards. Net card fees have risen by 20% year-on-year, reflecting a growing preference for premium experiences. Since 2019, card fee revenue has more than doubled, driven by recent updates to gold, delta, and Hilton cards, which have resulted in double-digit growth and impressive retention rates of 98%. CFO Christophe Le Cailec noted that this strategy aims to first attract customers with competitively priced products, build solid retention, and then enhance value through updated offerings and adjusted pricing.

Looking ahead, the company is gearing up for a major refresh of its platinum cards for U.S. consumers and businesses this fall. Additionally, the upcoming launch of a new Coinbase One card on the Amex network aims to attract younger, professionally mobile individuals interested in digital assets. Amex is optimistic about a “long runway for growth” in the expanding premium segment.

Credit Performance ‘Best in Class’

While spending appears robust, the financial well-being of Amex customers also looks encouraging. The company boasts the lowest expected credit card loss rate and the most favorable profit projections in the 2025 Federal Reserve stress test, highlighting the resilience of its cardholders even amidst hypothetical economic downturns.

For the second quarter, Amex reported a net depreciation rate of 2.0%, an improvement from 2.1% last year. They emphasize that overall credit performance remains “best in class.” This indicates that the majority of customers are managing to meet their financial obligations, not just spending.

This trend holds for younger members as well. It was revealed that delinquency rates for U.S. millennials and Gen Z customers are not worse than the industry averages, and they are performing “almost 40% better” than older adults in this regard.

There’s also the fact that premium features like airport lounges are increasingly sought after, addressing both access and overcrowding issues. Many affluent cardholders desire an enhanced lounge experience pre-flight. “We’re trying to make the lounge bigger,” said CEO Steve Squeri, acknowledging the popularity of these spaces and the innovative solutions being explored in response to high demand.

Record revenues and rising costs indicate this trend is likely to persist for some time. Clearly, there’s a long road ahead.

American Express opted not to provide further comments.