American Express (Amex) shares fell 3.62% on Friday despite exceeding Q3 profit estimates, as revenue missed Wall Street expectations and the firm announced plans to lay off 5% of its workforce. The credit card giant will trim jobs across its 77,000 global workforce to streamline operations ahead of artificial intelligence integration, incurring a $336 million restructuring charge.
AI Restructuring and Banking Industry Layoffs
To prepare for AI adoption, Amex Chief Financial Officer Christophe Le Caillec explained that the company must reduce management layers before implementing automated processes. Speaking to CNBC, Le Caillec stated, "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."
The workforce reduction reflects a broader trend across major financial institutions. A day prior, Barclays confirmed plans to cut 5,000 jobs—representing 5% of its staff—in a technology-focused cost push. Furthermore, six of the largest U.S. banks recently shed 15,000 employees while lifting first-quarter profits 18% to $47 billion.
Revenue Miss and Weak Underlying Growth
Despite Amex reporting a 13% increase in earnings per share (EPS) for Q3, investors raised concerns over the quality of the earnings. Key factors influencing the market response include:
- Pretax Profit Growth: Underlying pretax profit increased by only 1.6%, signaling sluggish operational momentum.
- Tax and Buyback Impact: EPS growth was primarily boosted by share buybacks and a lower tax bill rather than operational expansion.
- One-Time Asset Sales: An upgraded annual profit forecast relied heavily on a one-time gain from selling a business stake rather than core business revenue.
- Revenue Deficit: Quarterly revenue failed to meet Wall Street projections amidst broader global equity market sell-offs.
Why It Matters
This market reaction highlights growing investor skepticism toward corporate restructuring when top-line growth stalls. While major financial institutions trim headcount to preserve margins and finance tech initiatives, markets are increasingly penalizing revenue misses over artificial profit beats. As automated workflows replace traditional administrative roles across major banks, institutions will face mounting pressure to demonstrate that AI investments drive actual top-line revenue expansion rather than simple margin maintenance.
