American Express Just Reported Its Highest Card Member Spending Growth Rate in 3 Years. Here's What's Driving It.

American Express (NYSE: AXP) reported better-than-expected earnings for the first quarter on Wednesday and revenue that jumped 10% from a year ago. But I think the biggest takeaway from the earnings report is that the company's strategy shift last year is beginning to pay off in a big way.

American Express disclosed in its report that card member spending increased 9% in the first quarter, the most in three years. Management attributed the growth to demand for the company's premium products, which it has been marketing to millennial and Gen Z customers in recent quarters following a 2025 update to its consumer and business platinum cards.

"Our consistently strong performance reinforces that our strategy is working well, supported by our ongoing investment in growth initiatives," CEO Stephen Squeri said.

Despite the positive report, American Express stock dipped 3% in midday trading. Let's take a closer look at not only the report, but also why there are some possible storm clouds for American Express.

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American Express beats on earnings

American Express reported total revenues of $18.9 billion, up 10% from a year ago when adjusted for foreign exchange rates. Billed business was $428 billion, up 9%. The company reported net income of $2.97 billion for the quarter, up 15% from a year ago, and earnings per share of $4.28, up 18% from a year ago. Analysts at Yahoo! Finance were expecting revenue of $18.6 billion and earnings of $3.99 per share.

Card balances totaled $213.3 billion, up 8% from last year, and the company generated $6.1 billion in revenue from interest on card balances and personal loans -- the latter a revenue stream that sets it apart from credit card issuers Mastercard and Visa.

Another difference is the company's positioning to serve high-net-worth customers. American Express's revamp of its platinum card program increased the available perks to $3,500 while raising the annual fee from $695 to $895.

"We continue to see strong demand and engagement with our premium products across our customer base," Squeri said on the company's earnings call. "Within our U.S. platinum portfolio, we're seeing accelerated spend growth following the refresh while maintaining high retention rates after the fee increase went into effect. Millennial and Gen Z spending growth continues to be robust, and globally, over 70% of new accounts are on fee-paying products."

Where American Express goes from here

I'm not surprised to see American Express drop a bit today, extending its year-to-date losses to 12%. I think it's somewhat vulnerable to the Iran war, rising oil prices, and the impact that it could have on airline travel. International travel is a huge emphasis for American Express, as the company has been creating or expanding airport lounges around the world and adding additional hotel properties to its resort and hotel listings.

Chief Financial Officer Christophe Le Callec told analysts on the earnings call that airline travel growth dropped in March and April due to disruptions in Middle Eastern travel. Management said it didn't expect fuel costs to have a significant impact on the company's business, but I think it's worth watching.

Overall, airline spending for American Express rose 8% from a year ago and the company reaffirmed its guidance for revenue growth between 9% and 10%. Full-year profits are expected to be between $17.30 and $17.90 per share.

Despite that risk, I still think that American Express is the best credit card company to buy. By catering to a more affluent customer base -- and expanding that base to millennial and Gen Z customers -- I think it will be able to withstand any jolts to the economy, and its fee for platinum membership provides it with a reliable source of revenue.

American Express is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool has a disclosure policy.