Some stock drops look like bad news on the surface. Some are, yes, but some also tell a completely different story underneath.
And I think American Express (AXP) investors have been handed the latter. The payments giant beat earnings expectations, raised its full-year revenue guidance, and reported its strongest card member spending growth in three years. The stock fell anyway.
This kind of reaction can frustrate shareholders and even confuse casual observers. But for “Mad Money” host Jim Cramer, it’s a pattern he’s seen before, and one he thinks is creating a clear opening.
I think it’s a terrific opportunity in one of the best-run companies on earth.
American Express CEO Steve Squeri echoed that confidence in the company’s Q2 2026 earnings statement, noting: “Six months into the year, we’re seeing stronger momentum than we expected.”
Jim Cramer on why the market read the AXP earnings wrong
Cramer’s argument comes down to a single distinction. And it is one the market appears to have missed.
American Express beat earnings expectations in Q2 2026 and raised its full-year revenue growth guidance to approximately 10%, according to a company statement. Earnings per share (EPS) came in at $4.53, up 11% year-over-year (YoY). Net income reached $3.11 billion, up 8% from the same period a year earlier.
So why did the stock fall?
The answer lies in what management chose not to do. Instead of accelerating share repurchases, which would have boosted EPS more quickly, Squeri announced the company would reinvest its outperformance into growth initiatives.
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Full-year EPS guidance remained unchanged at $17.30 to $17.90. Investors read the unchanged EPS range as a red flag. Cramer read it differently in his few words.
The 176-year-old American Express is prioritizing long-term growth over boosting earnings per share, and that’s exactly why I also think the stock is a buy.
Investing.com‘s earnings call transcript data showed a 36% return on equity during the quarter. That’s evidence that the strategy is working. Return on equity measures how efficiently a company converts shareholder money into profit, and 36% is fair.
“Based on Steve Squeri’s track record, I think he deserves the benefit of the doubt here, which is why I’d be a buyer,” Cramer said.
Millennials and Gen Z now make up more than 60% of all new American Express accounts.Stuart Franklin/Getty Images
American Express Q2 2026 results are the numbers behind all of this
The underlying numbers are worth examining closely, because they tell a story the headline reaction obscured.
According to a company statement, Q2 2026 highlights included:
Revenue of $19.64 billion, up 10% YoY
Billed business up 9% on a foreign exchange-adjusted basis, led by travel and entertainment spending up 10%
Gen Z card members spending up 40%
Millennials and Gen Z account for 65% of new consumer accounts
Shareholder returns of $2.9 billion through dividends and buybacks
Let’s look at that Gen Z number. Squeri has been building toward this demographic deliberately for years.
“These Gen Z and Millennials love premium; they love getting something that’s luxe,” he told Fortune in an earlier interview. “They also love value.”
The bet is paying off. Millennials and Gen Z now make up more than 60% of all new American Express accounts, according to The Financial Brand. Squeri described the long-term value clearly at the 2024 Goldman Sachs U.S. Financial Services Conference:
“They don’t spend as much right now as a Gen Xer or a Boomer, and they don’t borrow as much, but we believe they’ll have 20 more years of relationship with us.”
That’s not a quarter-to-quarter trade but a decade-long revenue runway being built one new cardholder at a time.
AXP stock is down this year, but the longer track record is hard to dismiss
AXP is down about 8.27% year-to-date as of July 28, according to Yahoo Finance, underperforming the S&P 500‘s roughly 8.52% gain over the same stretch.
The stock hit a 2026 low of $290.97 on March 20 before recovering, and remains roughly 13% below its all-time high of $387.49 set Dec. 12, according to Yahoo Finance.
Zoom out, though, and the picture shifts. Over three years, AXP is up approximately 110%, compared to the S&P 500’s roughly 62% gain. Over five years, AXP has returned about 110% against the index’s roughly 69%, according to Yahoo Finance.
I crunched the numbers and found that American Express has outperformed the broader market convincingly over any multi-year window. The near-term pressure — an unchanged EPS guide, a pullback from all-time highs, a competitive premium card market — doesn’t erase that track record.
Cramer’s point is that the market sold the headline. The business kept running. And for long-term investors, that gap is the opportunity.
