American Express (NYSE:AXP): A Premium Model in a Changing World – Is It Worth a Look?

American Express (NYSE:AXP) remains one of the most structurally differentiated businesses in global payments. Its premium cardholder base, closed‑loop network, and multi‑layered revenue model continue to give it an economic profile that Visa and Mastercard simply do not share. Berkshire Hathaway’s long-standing conviction in the stock is well known, and the company’s recent performance suggests the core thesis still holds. In our view, the economics remain compelling, but the backdrop is shifting in ways investors cannot ignore.

The History of American Express (NYSE:AXP)

American Express began life in 1850 as an express mail service before evolving into financial services and launching its first charge card in 1958. It is now one of the world’s largest payment networks and card issuers, operating across more than 10 regions and serving premium consumers, SMEs, and corporates.

The company has spent the past several years refreshing its card suite, lifting annual fees, and targeting younger affluent cohorts. That strategy has worked: full‑year 2025 revenue reached US$72bn, while EPS came in at US$15.38, represeting a >$10bn profit ad up 15% year‑on‑year excluding a one‑off gain.

The Buffett Factor, And Why It Still Matters

Warren Buffett’s Berkshire Hathaway has a position in American Express, and it is one of Berkshire Hathaway’s most enduring. Berkshire collects more than US$500m in annual dividends from the holding, but the real story is the durability of the brand and the repeatability of its economics. Amex has always been a business built on loyalty, high‑spending customers, and predictable revenue streams. That logic remains intact. What has changed is the environment in which those customers earn, spend, and travel.

Amex is A Different Machine to Visa and Mastercard

Understanding Amex begins with understanding how it differs from its peers. Visa and Mastercard operate open‑loop networks: they process transactions between issuing and acquiring banks and earn a fee on volume, without taking credit risk. Amex runs a closed‑loop model. It is the issuer, the acquirer, and often the lender. The result is a broader, more diversified revenue base.

Amex earns from card spending, fees, net interest income, and merchant services. Card fees alone hit a record US$10bn in 2025, up 18%, helped by the repricing of the Platinum card and a deliberate shift toward fee‑paying products. The net interest income adds a yield component that Visa and Mastercard do not have. The trade‑off is credit exposure, but the premium customer base helps: delinquency rates have held around 1.37% for eight consecutive quarters, still below 2019 levels.

The bottom line is that Amex is more complex, higher‑margin, and more cyclically sensitive than its network‑only peers. In good times, the model compounds beautifully. In tougher conditions, it carries more exposure to consumer credit and spending cycles.

AI: An Internal Opportunity But An External Risk

Operationally, Amex is leaning into AI with intent. CEO Steve Squeri highlighted in the 2026 annual letter that the company has explored “hundreds of AI use cases,” deploying tools across sales, engineering, and customer service. Travel advisors in 19 countries now use AI‑driven tools for faster, higher‑quality recommendations.

The company’s third‑generation data and analytics platform (built on public cloud infrastructure) has cut the time required for key marketing and fraud processes by roughly 90%, with full migration targeted by 2027. Service centre calls per account have fallen about 25% over three years. With an annual technology budget of roughly US$5bn, these are meaningful investments.

The benefits are tangible. Faster fraud detection reduces losses. Better personalisation improves acquisition and retention. Efficiency gains expand margins without relying on headcount growth. In our view, AI is clearly additive to the model.

The external risk is more nuanced. Amex’s core customers (i.e. premium consumers, corporate travellers, and small business owners) overlap heavily with white‑collar professionals, the group most exposed to AI‑driven restructuring. Modelling suggests that AI‑displaced or AI‑foregone roles in the US reached 200,000–300,000 in 2025, materially above employer disclosures. Roles involving repetitive digital tasks, including data analysis and financial reporting, appear most vulnerable. The risk is not an overnight collapse in AmEx’s customer base, but a gradual erosion in spending and credit quality if white‑collar employment softens.

Markets have already shown sensitivity to this theme. Amex fell roughly 7.9% in a single session in February 2026 as AI‑related concerns rippled through credit and payments stocks. The move looked sentiment‑driven, but the underlying question it raised is real.

What the Numbers Say

Q1 2026 results, released on 23 April, were solid. EPS of US$4.28 beat consensus of US$4.01, while revenue of US$14.22bn represented 11.4% year‑on‑year growth. Management reaffirmed full‑year guidance for 9–10% revenue growth and EPS of US$17.30–US$17.90. Consensus sits at approximately US$17.53.

The Consensus net income/profit of roughly US$12.2bn implies around 13.8% growth on the trailing twelve months, consistent with management’s long‑term mid‑teens EPS ambition. The company returned US$8bn to shareholders in 2025 and has reduced its share count by about 7% since 2022 — a mechanical tailwind that supports per‑share earnings even if revenue growth moderates. Analyst sentiment is constructive but not unanimous. Eight analysts rate the stock a Buy, thirteen a Hold, and one a Sell, with a consensus target of around US$361.

Conclusion

American Express remains a high‑quality, well‑run business with a genuinely differentiated model. Buffett’s conviction has been earned over decades, and the company’s integration of AI appears to be strengthening the economics rather than threatening them. Fee growth, premium card refreshes, and disciplined underwriting all support the near‑term outlook.

The AI‑driven white‑collar displacement thesis, however, deserves ongoing attention. Amex’s customer base is exposed to the labour market shifts now underway, and any meaningful deterioration in professional employment would challenge the premium growth narrative faster than credit metrics alone would indicate. We believe Amex is a quality business at a fair price. Position sizing matters, and the next leg of growth will require both a constructive macro backdrop and continued execution on the company’s AI‑enabled efficiency agenda.