American Express Co (AXP) shares dropped Friday despite beating revenue expectations for the fourth quarter, a reminder that on Wall Street, you can do everything right and still get punished for the tiniest miss.

The company posted quarterly revenue growth of 10% year-over-year to $18.98 billion, edging past the analyst consensus of $18.92 billion. That growth came from exactly where you'd want it: higher card member spending, increased net interest income from growing revolving loan balances, and strong card fee growth. The good stuff.

But adjusted earnings per share came in at $3.53, just a penny shy of the $3.54 analysts expected. The culprit? A 10% jump in expenses, largely tied to marketing costs for the "Platinum refresh" and higher customer engagement fees. When you're trying to woo affluent cardholders with fancy perks, it turns out you actually have to spend money on those perks.

Segment Strength Across the Board

Card member spending, which American Express calls "Billed Business," rose 9% year-over-year to $445.1 billion. That's a staggering amount of transactions flowing through the network.

Breaking it down by segment: U.S. Consumer Services revenue climbed 11% to $9.16 billion, while Commercial Services revenue increased 6.7% to $4.4 billion. International Card Services saw the biggest jump at 16.9%, reaching $3.5 billion, and Global Merchant and Network Services revenue grew 7.7% to $2.04 billion.

Net card fees surged 17% year-over-year to $2.63 billion, marking the 30th consecutive quarter of double-digit growth in that category. That's the kind of consistency that makes CFOs smile.

Of course, expenses weren't sitting still. Total expenses increased 10% year-over-year to $14.48 billion, driven by those variable customer engagement costs and the U.S. Platinum Card refresh. Provisions for credit losses rose slightly to $1.4 billion from $1.3 billion a year ago, reflecting higher net write-offs. The fourth-quarter net write-off rate was 2.1%, up from 1.9% the prior year, though still considered best in class.

The Generational Spending Shift

Here's where it gets interesting. CFO Christophe Le Caillec revealed to Reuters that for the first time ever in the company's U.S. consumer business, Gen Z and Millennial spending has surpassed Gen X. Let that sink in for a moment.

This younger cohort is increasingly gravitating toward premium products like the Platinum card to unlock lifestyle perks and travel benefits. While high borrowing costs have forced many Americans to tighten their belts, American Express's affluent members have actually ramped up spending on restaurants, luxury goods, and international travel. It's a tale of two economies, and Amex is firmly planted in the more fortunate half.

Chair and CEO Stephen Squeri emphasized that fourth-quarter card member spending increased 8% on a foreign-exchange-adjusted basis, and credit performance remained best in class. He pointed to strategic investments like the U.S. Platinum Card refresh and technology upgrades including new app features and GenAI-powered experiences as drivers of continued growth.

Dividend Boost and Rate Cap Resistance

In a move that should please shareholders, American Express announced plans to increase its quarterly dividend by 16%, from $0.82 to $0.95 per share, beginning with the first-quarter 2026 dividend declaration. That's a meaningful bump.

Meanwhile, management is pushing back against a potential one-year cap on credit card interest rates at 10%, as proposed by the Trump administration. Le Caillec told Reuters that while the company supports affordability, it doesn't believe a price cap would achieve that goal. The company is sticking to its "disciplined approach" to its premium membership model, which is corporate speak for "we're not changing our business model because of political pressure."

Looking Ahead to 2026

American Express expects full-year 2026 revenue of $78.73 billion to $79.45 billion, representing 9-10% year-over-year growth, compared to the analyst consensus of $78.62 billion. The company projects earnings per share of $17.30 to $17.90, compared with the analyst consensus of $17.41.

Despite the solid results and optimistic outlook, American Express shares were down 3.32% at $346.59 at the time of publication on Friday.