SKN | Why American Express Stock Fell Despite Strong Earnings and a Higher Profit Forecast

Key Points:

• American Express shares fell 3.62% on Friday, despite the company exceeding third-quarter profit estimates.
• The company plans to cut approximately 5% of its 77,000-person global workforce as it restructures operations and prepares for wider artificial intelligence adoption.
• A $336 million restructuring charge, slower underlying pretax profit growth, and revenue that missed Wall Street expectations raised questions about the quality of the company’s earnings growth.

American Express (NYSE: AXP) shares declined 3.62% on Friday, October 23, 2026, despite the credit card company reporting better-than-expected third-quarter profits and raising its annual earnings forecast. The market reaction reflected concerns about the strength of the company’s underlying business, the cost of a major workforce restructuring, and the extent to which one-time financial benefits contributed to its improved outlook. The announcement also highlights how established financial institutions are reorganizing operations as artificial intelligence reshapes expectations for productivity and costs.

AI Strategy Drives a 5% Workforce Reduction

American Express plans to reduce its global workforce by approximately 5%, affecting a company that employs around 77,000 people. The restructuring is expected to generate a one-time charge of approximately $336 million as the company prepares to simplify its organizational structure and increase automation.

Chief Financial Officer Christophe Le Caillec told CNBC that the initiative aims to make American Express leaner, more agile, and better prepared to use AI. His explanation emphasized that restructuring processes before automating them can help the company avoid applying new technology to inefficient operating models.

The approach reflects a broader corporate strategy: reduce management layers, expand responsibilities across teams, and redesign workflows before deploying automation at scale. However, the anticipated benefits will depend on whether AI investments produce measurable efficiency gains without undermining customer service, risk management, or operational resilience.

Strong Headline Earnings Mask Slower Growth

The company’s financial results presented a more complicated picture than its headline earnings suggested. Earnings per share increased 13%, but underlying pretax profit grew by only 1.6%, according to the supplied report.

The difference matters because earnings per share can rise for reasons that do not necessarily indicate stronger operating performance. In American Express’s case, a lower tax bill and share repurchases contributed to earnings growth. Buybacks reduce the number of shares outstanding, potentially increasing earnings per share even when total profits grow more slowly.

Meanwhile, revenue fell short of Wall Street expectations. Although American Express raised its annual profit forecast, the improvement was largely supported by a one-time gain from selling a business stake. Once that gain and restructuring costs are excluded, the improvement in the outlook was more modest.

For investors, these distinctions help explain why exceeding an earnings estimate may not be sufficient to support a stock’s price. Markets also assess revenue growth, recurring profitability, and the sustainability of management’s forecasts.

Banking Industry Faces a Broader Cost Reset

American Express is not alone in pursuing workforce reductions linked to technology and efficiency. Barclays recently confirmed plans to eliminate approximately 5,000 jobs, representing around 5% of its workforce, as part of a technology-driven cost initiative.

The supplied report also noted that six major U.S. banks collectively reduced their workforces by approximately 15,000 employees while increasing first-quarter profits by 18% to $47 billion. These figures illustrate the industry’s broader effort to improve efficiency, although they do not establish that AI alone caused the job cuts or profit gains.

For financial institutions, automation offers opportunities to streamline back-office processes, improve data analysis, and accelerate certain customer operations. At the same time, implementation costs, cybersecurity concerns, regulatory requirements, and the possibility of execution failures can limit the financial benefits.

What Investors Should Watch Next

American Express’s next challenge is to demonstrate that its restructuring can translate into sustainable operating improvements. Investors will be watching revenue growth, spending trends among cardholders, credit quality, operating expenses, and the realized benefits of AI adoption. They will also need to distinguish recurring earnings from one-time gains when evaluating future guidance.

The decline in AXP shares illustrates that strong reported earnings do not always signal equally strong underlying business momentum. If American Express delivers measurable efficiency gains while maintaining revenue growth and customer engagement, its restructuring could strengthen long-term performance. If growth remains subdued or automation costs exceed expectations, investors may continue to question whether the benefits justify the transition.