American Express (AXP), a prominent holding in Warren Buffett's investment portfolio, has demonstrated exceptional market performance over the last five years, consistently outpacing the broader S&P 500 index. This enduring success is attributed to its robust business model, strategic investments, and strong brand recognition. The company's focus on an affluent client base and its continuous innovation in marketing and technology are key drivers of its sustained growth and competitive edge within the financial services sector.
Berkshire Hathaway, under Warren Buffett's guidance, has accumulated a substantial stake in American Express, currently valued at over $53 billion, representing 22.1% of all outstanding shares. This makes American Express the second-largest position within Berkshire Hathaway's equity portfolio, trailing only Apple. Buffett has frequently lauded American Express for its strong global brand, consistent dividend payouts, and integral role in the global economy, all of which align perfectly with his investment philosophy. Its cash-rich operations and leadership in its market segment further solidify its position as a valuable asset.
American Express continues to fortify its market position through significant investments. In 2025, the company allocated $6.3 billion to marketing efforts, marking a 75% increase since 2019. These investments have yielded tangible positive outcomes, including heightened customer demand, enhanced engagement, improved credit quality, and stronger customer retention. The company strategically invests in both operational maintenance and innovative solutions, with a particular emphasis on technology. A new cloud-based data analytics model is being implemented to enable deeper personalization in marketing strategies, aiming for even better results.
The company's financial performance in the fourth quarter of 2025 underscored its strength, reporting a 10% year-over-year increase in revenue and a 16% rise in earnings per share (EPS). Card fees experienced a 17% surge compared to the previous year, with no decline in renewal rates despite a card refresh that included increased annual fees. Notably, American Express's business model is increasingly resonating with younger demographics. While Gen-Z spending constituted a smaller portion of the total at 6%, it exhibited the fastest growth rate among all age groups, expanding by 36% year-over-year. This trend suggests a promising long-term growth trajectory for American Express as this demographic matures and increases its spending capacity.
Over the past half-decade, American Express stock has delivered a remarkable 201% return, significantly outperforming the S&P 500's 91% gain during the same period. This impressive performance is expected to persist as the company continues to strategically invest in its future and expand its market share, particularly among emerging consumer segments. The company's unwavering commitment to its core strengths and adaptive strategies ensures its enduring relevance and potential for future success in the dynamic financial landscape.