American Express shares are set to climb back as more customers sign up for its pricey premium cards, according to BMO Capital Markets, which began covering the stock on Friday with an outperform rating. That is Wall Street’s way of saying the stock should do better than the broader market. BMO put a $380 price target on the shares, about 24% above Thursday’s close.

The call comes after a rough year. American Express stock has dropped roughly 17% in 2026, pulled down by worries over the company’s rising costs and fears that economic and global uncertainty could cut into how much its cardholders spend.

BMO analyst Andrew Bauch argued in a Friday note that investors are looking at the wrong problem. In his view, worries about competition in premium cards and heavy reinvestment miss the bigger picture: Amex’s premium customer base is still growing, younger customers are signing up for fee-paying cards, those card fees keep stacking up, and the company’s spending is paying off. He called American Express one of the steadiest long-term growers among the companies he covers.

The company’s own numbers back up the demand side of that argument. In its second-quarter report released July 24, American Express said revenue rose 10% to $19.6 billion and earnings per share climbed 11% to $4.53. Cardholders charged $455.8 billion on their cards in the quarter, up 9% from a year earlier.

The standout was annual card fees, the money customers pay just to carry the card. That line jumped 15% to $2.862 billion, up from $2.48 billion a year earlier, and the company said growth came mainly from its premium card lineup. Put simply, for every $100 in card fees Amex collected a year ago, it now collects about $115.

That growth is happening even as the cards get more expensive. American Express raised the annual fee on its flagship Platinum Card from $695 to $895, a $200 jump, and customers have largely stuck with it. Management said the Platinum group is now its fastest-growing set of U.S. consumer customers.

Younger shoppers are driving much of the demand. Millennial and Gen Z customers made up 65% of new consumer accounts worldwide, close to 2 out of every 3, while 75% of all new accounts, or 3 out of 4, were on cards that charge an annual fee. Spending by U.S. consumer cardholders grew 11%, with travel and entertainment spending up 13%.

The cost worries are real, and they show up in the same report. The money Amex spends on cardholder perks, such as lounge access, travel credits and other services, rose 50% to $1.949 billion in the quarter, from $1.301 billion a year earlier. Rewards costs climbed 9% to $5.051 billion. For every $2 the company spent on those perks a year ago, it now spends about $3.

That is the tension investors have been weighing. Amex is paying much more to make its cards worth their higher fees. BMO’s argument is that the spending is working, because it pulls in more fee-paying customers who stay loyal and spend more on their cards. The company has been leaning into that approach, and it raised its full-year 2026 revenue growth forecast to 10% in July.

For everyday cardholders, the trend cuts both ways. Premium cards keep adding perks to justify their price, but the bill to carry one keeps rising. Someone holding a Platinum Card now pays $895 a year before earning a single point, which means the perks have to deliver at least that much value for the card to make sense. Many younger customers are clearly deciding the trade is worth it.

Not every analyst is as upbeat as BMO. Of the 32 analysts covering American Express, 17 rate it a buy or strong buy and 15 rate it a hold, according to LSEG data. That is roughly an even split between those who expect the stock to climb and those waiting on the sidelines.

The next test comes soon. American Express is scheduled to release its third-quarter results on Friday, October 23, at about 7 a.m. Eastern time, followed by a call with investors at 8:30 a.m. That report will show whether card fees kept growing at a strong clip through the summer and whether the company’s higher spending on perks is starting to pay for itself.

JBizNews Desk | Wall Street

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