American Express: A Most Satisfactory Investment

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Now, one often hears tales of financial wizardry, but rarely does one encounter a situation as delightfully straightforward as the matter of Berkshire Hathaway’s affection for American Express. Mr. Buffett, a gentleman of impeccable financial sense, has seen fit to accumulate a position in the company – a truly substantial one, amounting to over $53 billion, or 22.1% of all shares outstanding. A dashedly impressive figure, wouldn’t you agree? It constitutes a goodly 16.4% of the entire Berkshire Hathaway equity portfolio, second only to Apple – a company, one gathers, with a penchant for sleek gadgets rather than solid financial footing.

Buffett, a fellow not given to extravagant pronouncements, has sung the praises of American Express on numerous occasions, pointing out its global brand and dependable dividend. It rather neatly fits the bill of a sensible investment, playing a large role in the economic machinery, being comfortably cash-rich, and leading the charge in its particular field. None of this, thankfully, has altered, which explains its enduring presence in the Buffett portfolio and, frankly, why a chap would be well-advised to consider it a sound proposition even today.

Investing for the Future, You See

The model, one observes, hasn’t undergone any startling revolutions. American Express, far from resting on its laurels, is as robust as ever, continuing to invest in its business and competitive advantages. It has, with a rather clever stroke, carved out a niche serving those with a bit of surplus income, and Chief Executive Officer Stephen Squeri, on the fourth-quarter earnings call, noted that these investments are bearing fruit. In each area where they’ve focused their efforts, the company can point to direct, positive results – a state of affairs that is, quite frankly, a relief in these uncertain times.

A staggering $6.3 billion was spent on marketing in 2025, a 75% increase since 2019. The results are apparent: higher customer demand, improved credit quality, and stronger retention. They invest in two main areas: maintaining the status quo and, more excitingly, innovation. Technology, naturally, plays a key role, and they’re rolling out a new cloud-based data analytics model for deeper personalization in their marketing – a particularly clever bit of code, what! – leading to better expected results. One pictures a team of bright sparks tinkering away in a laboratory, producing financial miracles.

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Showing Up in the Results, Don’t You Know

American Express demonstrated rather robust growth in the 2025 fourth quarter, with a 10% year-over-year increase in revenue and a 16% increase in earnings per share (EPS). Card fees increased 17% year over year, and, remarkably, there was no decrease in renewal rates despite a card refresh with increased annual fees. A most satisfactory state of affairs, wouldn’t you say?

Its model is resonating with younger consumers, too. Gen-Z spending accounted for a mere 6% of the total – the smallest of any age group – but grew a remarkable 36% year over year – the fastest of any age group. This points to a long growth runway as this group ages, which is why American Express is such a timeless company. One can almost see a future filled with financially astute youngsters wielding American Express cards with aplomb.

American Express stock has rather decisively crushed the S&P 500 during the past five years, up 201% versus 91% for the broader index. Expect that to continue as the company invests for the future and captures market share among younger consumers. A most promising outlook, and one that should bring a smile to even the most cynical investor’s face.

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2026-02-09 12:52