American Express (Amex) shares closed 3.62% lower on Friday. This came as a surprise, as the credit card giant exceeded Q3 profit estimates.
The company also announced plans to cut about 5% of its 77,000 global workforce to prepare for AI. Amex is also taking a $336 million restructuring charge tied to the plan.
Amex Wants Fewer Layers Before It Hands Work to AI
Chief Financial Officer Christophe Le Caillec gave CNBC three reasons for the move.
- To make Amex leaner
- To make the company more agile
- To prepare it for AI
He also explained why the job cuts have to come before the automation.
“You don’t want to automate processes that are not optimally structured. So what we’re doing here is to reduce layers and increase spans of controls, so that we can automate and take advantage of AI in the coming quarters and the coming years,” Le Caillec said.
Amex is not the only lender cutting staff. A day earlier, Barclays confirmed it would cut 5,000 jobs, about 5% of its workforce, in a tech-driven cost push.
Six of the biggest US banks also shed 15,000 employees while lifting first-quarter profits 18% to $47 billion.
At Amex, the restructuring also shows up in the profit forecast. The company is paying for it with part of the one-time gain.
Why Did Amex Stock Fall Despite Strong Earnings?
The problem was how the company achieved those profits.
Amex’s earnings per share rose 13%, but its underlying pretax profit grew just 1.6%. Much of the earnings growth came from a lower tax bill and share buybacks, rather than stronger business performance.
Revenue also missed Wall Street’s expectations.
Meanwhile, Amex raised its annual profit forecast, but the increase was largely driven by a one-time gain from selling a business stake. Excluding that gain and restructuring costs, its outlook improved only slightly.
For investors, the results suggested Amex’s underlying business was growing more slowly than its headline earnings implied.
That disappointment, combined with uncertainty around its AI restructuring plans and a broader market sell-off, likely contributed to Friday’s decline.
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