The recent pronouncements regarding American Express (AXP +1.65%) – a slight dip following the close of the fourth quarter of 2025 – should not be mistaken for weakness. Rather, they represent a momentary pause in what has been, undeniably, a sustained ascent. Revenue, cleansed of the distortions of mere interest, rose by a respectable 10% year over year, and net income, that most telling of metrics, climbed 13%. These are not fleeting indicators, but evidence of a deeply entrenched vitality.
It is time, then, to subject this enterprise to a more rigorous examination, to discern the forces at play beneath the surface of these numbers. Herein lie three considerations for any investor venturing into this particular corner of the financial landscape.
1. The Bastion of Brand and Network
Berkshire Hathaway, that discerning arbiter of value, maintains a substantial 22% stake in American Express. This is no accident. Warren Buffett’s criteria, notoriously stringent, demand an economic moat – a defensible position against the encroaching tides of competition. American Express possesses this, not through a single fortification, but through a dual system of protection.
The first is the power of its brand. Amex’s premium cards are not merely conduits for transactions; they are emblems of a certain lifestyle, attracting a clientele that values not only financial privilege but also impeccable service, curated rewards, and a seamless digital experience. This is not simply marketing; it is the cultivation of a devoted constituency.
But the brand is only half the equation. American Express also operates the underlying infrastructure – the very arteries through which these transactions flow. A network of 153 million active cards, connected to 160 million merchant acceptance locations. Each new cardholder strengthens the network, attracting more merchants, which in turn draws in more cardholders. A virtuous cycle, self-reinforcing and remarkably resilient. To challenge this position would require not merely a superior product, but the dismantling of an entire ecosystem – a task of Sisyphean proportions.
2. Decoupling from the Tempest of Interest
In the fourth quarter, American Express derived $9.9 billion – nearly half its revenue – from merchants utilizing its platform. A further $2.6 billion came from membership fees. A mere 24% of revenue stemmed from net interest income. This is a critical distinction. While many financial institutions are vulnerable to the vagaries of interest rate fluctuations and the inherent risks of lending, American Express enjoys a degree of insulation.
This is, again, a consequence of its brand power. Attracting a higher-income demographic diminishes the reliance on revolving balances – the perpetual debt that plagues so many consumers. Amex profits not from the cost of borrowing, but from the very act of commerce. The average card member expended over $25,000 in 2025 – a testament to their spending habits and the company’s ability to capture a share of that expenditure. It is a model predicated on volume, not usury.
3. The Weight of Expectation
The past decade has been generous to holders of American Express stock. A total return of 641% (as of February 2, 2026) is not merely impressive; it is a demonstration of sustained, disciplined performance. But such success inevitably breeds expectation, and with expectation comes a higher valuation.
Currently, the stock trades at a price-to-earnings ratio of 22.9 – a level approaching a three-year high. This suggests that the market has already priced in much of the future growth. To achieve further outsized returns may require a prolonged period of exceptional performance – a daunting prospect. Prudent investors might consider a strategy of dollar-cost averaging – a gradual accumulation of shares, mitigating the risk of overpaying at the peak of the cycle. It is a recognition that even the most fortified positions are not immune to the inevitable ebb and flow of the market.
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2026-02-04 23:32