✨ Amex lights up the rich and famous

What’s going on here?

Credit card company American Express announced its quarterly results on Friday, showing how the other half have been living.

What does this mean?

Fourth-quarter revenue at American Express – or Amex, to its friends – came in slightly higher than expected, and profit was more or less in line. Looking ahead, the company believes it’ll grow revenue a percent or two faster than analysts have predicted. But it might be playing things safe on costs: Amex says its profit will only match current forecasts.

Why should I care?

For markets: The bar is high.

With shares that were up some 75% over the last year and a valuation at its highest level in over two decades, it might not be surprising that Amex’s stock initially dropped after the update. Aside from profit-taking, there are a few potential reasons why. For one, 70% of Amex’s cards come with a subscription fee, which makes up about 12% of revenue. So when the firm added 13 million new cards last year, investors might’ve hoped for a higher 2025 profit forecast than they got. And, for another, competition is heating up – especially with rivals Capital One and Discover merging. So Amex has been trying to woo younger customers to get ahead. But it’s risky: they’re more likely to default on debts, denting the company’s profit.

The bigger picture: That “K-shaped economy” is back in force.

Amex’s results highlight the spending patterns of wealthier consumers, who’ve been spending big across all regions and products. According to economists, that points to around 3% global economic growth for 2024. And that illustrates how the rich have held up while the poor have struggled – a so-called K-shaped economy. Case in point: Amex saw airline spending up 14%, while business and first-class spending was up 19%.

What’s going on here?

The head honcho of Reliance, India’s wealthiest mogul, announced plans to create the world’s biggest AI data center – proving that even if cash can’t make you happy, it can make a country tech-savvy.

What does this mean?

Reliance is – by some metrics – India’s biggest conglomerate, with operations spanning energy, entertainment, textiles, and plenty in between. That will now include data centers: the tech-heavy warehouses tasked with fueling power-hungry AI systems. And not just the run-of-the-mill kind, either: Reliance is building a facility with a potential capacity of three gigawatts, which would dwarf anything in existence today. The audacious endeavor could cost up to $30 billion, not to mention its colossal energy requirements – raising valid questions about feasibility, funding, and sustainability. But hey, if anyone can do it, it’s the billionaire with a reputation for disrupting markets – oh, and for commissioning Rihanna’s first performance in nearly a decade.

Why should I care?

For markets: When all else fails, bring in the robots.

India’s benchmark Nifty 50 index – which tracks the country’s 50 biggest publicly listed firms – has now tumbled 11% from its September highs. Investors have grown wary of lofty valuations, not least because closely watched companies have released underwhelming earnings as key sectors have slowed down. But Reliance’s ambitious plan could bolster the economy at just the right time. By investing in AI infrastructure and expanding the presence of super-smart applications across India as a result, the project could reduce the stock market’s dependence on cyclical industries like real estate and traditional tech.

The bigger picture: The tortoise might not win this race.

India has some catching up to do. The US is pulling ahead in the AI space, with The Stargate Project slated to funnel some $500 billion into related infrastructure. Besides that big-budget plan – spearheaded by OpenAI, no less – the US intends to cement its dominance through more hefty investments, deregulation, and strategic company alliances.