American Express Navigates Volatility with Resilient Customer Engagement

The stock market’s April turbulence, fueled by shifting U.S.-China trade policies and geopolitical risks, tested investor confidence. Yet American Express CEO Stephen J. Squeri offered a contrarian narrative: premium customers aren’t hunkering down—they’re spending more, using travel benefits, and deepening ties to the brand. Behind the headlines of market volatility lies a story of strategic discipline and customer loyalty driving American Express’s (AXP) performance.

A Strong Q1 Performance Anchored by Premium Customers

American Express’s first-quarter 2025 results underscored the power of its premium customer base. Billed business rose 6% to $387.4 billion, while revenue grew 7% to $17.0 billion, with EPS climbing 9% to $3.64. Squeri framed this as evidence of the company’s resilience amid macroeconomic uncertainty. “Our premium customer strategy remains a fortress,” he said, emphasizing disciplined expense management and investments in high-value services.

Key to this resilience was customer engagement. Consolidated expenses surged 10% to $12.5 billion, driven by “variable customer engagement costs,” a metric reflecting increased usage of travel benefits and premium services. This spending surge, while pressuring margins, signals that affluent customers are not cutting back on discretionary spending—instead, they’re leveraging AmEx’s curated offerings like global travel concierge services and luxury hotel partnerships.

The Disconnect Between Market Volatility and Customer Behavior

Squeri’s comments sidestepped direct references to stock market swings, but the timing of AmEx’s results offers context. The company’s stock rose 11% in early April, coinciding with a broader market rebound after President Trump’s tariff policy pause. The S&P 500’s 2.2% jump on April 6—the best single-day gain since 2008—suggested investors were pricing in reduced trade war risks.

Yet AmEx’s performance wasn’t purely a bet on macroeconomic easing. The 10% rise in customer engagement costs suggests premium users were actively engaging with AmEx’s ecosystem, even as headlines warned of a potential recession. Travel-related spending, in particular, surged, with AmEx’s travel services revenue growing 8% year-over-year. This aligns with broader trends: American Express’s World Retail Congress report highlighted that 72% of global retailers now prioritize “phygital” (physical + digital) experiences to drive loyalty.

Strategic Leverage: The “Magic Six” and Team-Driven Growth

Beyond transactional metrics, AmEx’s recent World Retail Congress report unveiled the “Magic Six” behaviors of high-performing teams: collaboration, customer empathy, data-driven decisions, innovation, adaptability, and accountability. These behaviors, the report argued, correlate with 30% higher revenue growth and 20% better customer satisfaction. For AmEx, this means empowering its service teams to act as trusted advisors for premium clients—a competitive edge in an era of AI-driven personalization.

The company’s focus on phygital retail is equally strategic. Partnerships with Tesco, IKEA, and Primark reflect a push to blend digital convenience with curated in-person experiences. For investors, this signals a long-term play: as online shopping matures, AmEx’s ability to monetize high-margin travel and luxury services becomes a moat against rivals.

The Bottom Line: A Resilient Business Model, But Not Without Risks

AmEx’s Q1 results and forward guidance project full-year revenue growth of 8-10% and an EPS range of $15.00–$15.50, despite margin pressures from rising engagement costs. The stock currently trades at 10.2x trailing EPS—below its five-year average of 12.5x—suggesting room for upside if macro risks subside.

However, risks remain. The 2.1% net write-off rate, while stable, could rise if unemployment spikes. Meanwhile, the 10% jump in expenses highlights a trade-off: AmEx’s customer-centric model requires sustained investment. Yet with $387 billion in billed business and a 11% stock surge already pricing in some optimism, the data argues that AmEx’s premium strategy is working.

Conclusion: A Buy on Resilience and Long-Term Vision

American Express’s April performance tells a clear story: its premium customers are not hiding from volatility—they’re leaning into the brand’s ecosystem. The 6% revenue growth and 10% engagement cost surge, paired with stable credit metrics, suggest that AmEx’s focus on high-value services is paying off.

For investors, the case is compelling. At 10.2x earnings and with a dividend yield of 1.8%, AmEx offers a blend of defensive income and growth potential. If the company’s “Magic Six” strategies and phygital partnerships deliver on their promise, AmEx could outperform even as macro risks linger.

As Squeri put it, “Our customers aren’t bunker-bound—they’re building futures.” For investors, that future looks increasingly AmEx-colored.