Jim Cramer says American Express sell-off after earnings is a buying opportunity

AXP -1.52%

Some stock declines look troubling on the surface. Sometimes they are. But sometimes they reflect a different story beneath the headline, and Jim Cramer says American Express investors may have been handed exactly that kind of setup.

The payments company beat earnings expectations, raised its full-year revenue guidance and reported its strongest card member spending growth in three years, yet the stock fell after the report. That reaction can frustrate shareholders and confuse casual observers, especially when a company is still showing growth in revenue, spending and customer engagement. For "Mad Money" host Jim Cramer, however, it fits a pattern he says he has seen before and one that creates an opening.

"I think it's a terrific opportunity in one of the best-run companies on earth."

American Express CEO Steve Squeri echoed that confidence in the company's Q2 2026 earnings statement, saying: "Six months into the year, we're seeing stronger momentum than we expected."

Jim Cramer says the market misread AXP earnings

Cramer's view rests on a distinction he says the market appears to have missed.

American Express beat earnings expectations in Q2 2026 and raised its full-year revenue growth guidance to approximately 10%, according to a company statement. Earnings per share came in at $4.53, up 11% year over year, while net income rose to $3.11 billion from the same period a year earlier, an 8% increase.

The stock still fell, and the reason may lie in what management chose not to do. Rather than accelerate share repurchases, which could have lifted earnings per share more quickly, Squeri said the company would reinvest its outperformance into growth initiatives.

Full-year EPS guidance was left unchanged at $17.30 to $17.90. Some investors interpreted the unchanged range as a warning sign. Cramer said he sees it differently.

American Express, now 176 years old, is prioritizing long-term growth over a near-term boost to EPS, and Cramer said that is why he views the stock as a buy.

Investing.com's earnings call transcript data showed a 36% return on equity during the quarter. Return on equity measures how efficiently a company converts shareholder capital into profit, and Cramer pointed to that figure as evidence that the strategy is working.

"Based on Steve Squeri's track record, I think he deserves the benefit of the doubt here, which is why I'd be a buyer," Cramer said.

The numbers behind American Express's quarter

The underlying results help explain why the market reaction may have overlooked the broader picture. According to a company statement, Q2 2026 highlights included:

• Revenue of $19.64 billion, up 10% year over year
• Billed business up 9% on a foreign exchange-adjusted basis, led by travel and entertainment spending up 10%
• Gen Z card members spending up 40%
• Millennials and Gen Z accounting for 65% of new consumer accounts
• Shareholder returns of $2.9 billion through dividends and buybacks

The Gen Z figure is especially notable. Squeri has been building toward that demographic for years.

"These Gen Z and Millennials love premium; they love getting something that's luxe," he told Fortune in an earlier interview. "They also love value."

The strategy appears to be working. Millennials and Gen Z now make up more than 60% of all new American Express accounts, according to The Financial Brand. Squeri described the long-term value at the 2024 Goldman Sachs U.S. Financial Services Conference: "They don't spend as much right now as a Gen Xer or a Boomer, and they don't borrow as much, but we believe they'll have 20 more years of relationship with us."

That reflects a long-term revenue base being built one cardholder at a time, rather than a quarter-to-quarter trade.

AXP stock is down this year, but its multi-year record remains strong

AXP is down about 8.27% year to date as of July 28, according to Yahoo Finance, trailing the S&P 500's roughly 8.52% gain over the same period. The stock hit a 2026 low of $290.97 on March 20 before recovering, and remains about 13% below its all-time high of $387.49 set on Dec. 12, according to Yahoo Finance.

Over longer periods, the picture changes. Over the past three years, AXP is up approximately 110%, compared with the S&P 500's roughly 62% gain. Over five years, AXP has returned about 110% versus the index's roughly 69%, according to Yahoo Finance.

The near-term pressure — unchanged EPS guidance, a pullback from all-time highs and competition in the premium card market — does not erase that longer track record. In a market that often reacts quickly to guidance, the quarter's mix of stronger revenue, higher spending and reinvestment rather than bigger buybacks appears to have mattered as much as the headline numbers. Cramer's argument is that the market sold the headline while the business kept performing, and that gap is what makes the stock attractive to him.

This story was originally published by TheStreet on Jul. 29, 2026, where it first appeared in the Investing section.