On Oct. 23, American Express (NYSE: AXP) delivered excellent third-quarter 2026 results and raised its full-year guidance. The financial services giant is forecasting a record $18.30 to $18.60 in full-year earnings per share ($17.60 to $17.90 adjusted) and another year of 10% revenue growth. The midpoint of American Express’s adjusted earnings guidance is a 15.4% increase over 2025.
Given the impeccable results, it may seem strange that American Express is down 15.3% year to date. If that level holds, it would be the worst annual decline since 2015.
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Here are four reasons American Express is selling off, and whether the financial stock is a buy anyway.
1. American Express stock was red hot entering 2026
Over the last decade, American Express has delivered a 452.8% total return, compared with 322.1% for the S&P 500 (SNPINDEX: ^GSPC), while its earnings have nearly tripled. And in the last three years, American Express is up 137.6% while its earnings are up 47%.
So, despite American Express’s excellent results, the simplest reason why it’s underperforming in 2026 is probably just a decade-long, mostly uninterrupted surge in the stock price that outpaced earnings growth, leaving American Express prone to a pullback.
2. Margin compression
Another factor affecting American Express is rising expenses that have eroded its margins.
AXP Revenue (TTM) data by YCharts
As you can see in the chart, American Express’s revenue and earnings have skyrocketed, but its gross margins are steadily ticking down.
In its latest quarter, card member reward expenses jumped 10% year-over-year, business development was up 11%, and card member services jumped 36%. Total expenses were up 9%, matching the 9% year-over-year increase in revenue. But the fact remains that American Express is spending heavily on customer engagement, which could weigh on margins if cardholder spending weakens.
3. A consumer spending slowdown
Some investors may be worried that American Express’s affluent customer base could eventually feel the impact of a higher cost of living and inflationary pressures. It’s no secret that consumer spending has been strained by higher costs for household goods, rising utility bills, gas prices, and a massive slowdown in housing and home improvement. American Express’s customers continue to spend at a healthy rate, but that may be partly due to strong employment and near-record-high levels in real estate and the stock market.
