American Express Just Showed Why Berkshire Hathaway Still Likes This Credit Card Stock

American Express reported Q1 revenue of $18.9 billion and EPS of $4.28, beating estimates of $18.6 billion and about $4.00 per share, with revenue up 10% and EPS up 18%. Management kept 2026 guidance intact at 9%-10% revenue growth and $17.30-$17.90 in EPS, which disappointed investors and pressured the stock despite solid underlying spending trends from affluent cardholders. Restaurant spending rose 9% and airline spending 8%, reinforcing the company's resilient premium-consumer franchise.

Analysis

The market is treating this as a classic “good quarter, soft guide” setup, but the deeper read is that AXP is behaving more like a high-quality consumer subscription business than a cyclical lender. That matters because the earnings stream is increasingly driven by affluent spend retention and fee durability, which should make cash flows less elastic than the market is pricing. If that interpretation holds, the right comp is not a low-multiple card issuer; it is a premium network-plus-brand compounder with a mid-teens earnings power floor.

The first-order loser is not Visa or Mastercard on volume; it is the market’s assumption that network-only models deserve a structural premium just because capital intensity is lower. AXP’s integrated model lets it internalize more of the relationship economics, and in a slower macro environment that can translate into better retention, higher engagement, and more stable monetization per account. Second-order, higher marketing and technology spend looks less like margin leakage and more like reinvestment to defend the affluent cohort moat; if that spend improves acquisition quality, near-term margin pressure can precede a longer runway of above-consensus EPS growth.

The key risk is not recession in the abstract, but a synchronized pullback in premium travel and dining over the next 2-3 quarters, which would hit the highest-value spend buckets first. Because the stock is already valued as a quality compounder, the setup is vulnerable to further multiple compression if guidance fails to re-accelerate by the next print. Conversely, if management merely holds current growth targets while peers show softness, the current drawdown becomes a buy-the-dip signal rather than a warning.

The contrarian point is that the market may be over-anchored to the idea that guidance must keep moving higher in a strong stock. In reality, maintaining 9%-10% revenue growth with double-digit EPS expansion in a choppy macro backdrop is more impressive than the post-earnings reaction suggests. This is a name where the business quality is likely being underpaid for relative to the durability of its demand base.

Key Decisions for Investors

• Initiate a tactical long in AXP for a 3-6 month horizon; use the post-earnings dip as entry, targeting a re-rating back toward prior premium valuation if the next spend update confirms stable affluent demand.
• Pair trade: long AXP / short a basket of lower-quality consumer discretionary or subprime credit exposure over the next 1-2 quarters; the spread should widen if premium spend holds while weaker consumers slow.
• Sell downside premium on AXP via put spreads into the next earnings cycle; implied volatility looks attractive if the market is overpricing a near-term guide cut, with defined risk below the recent post-earnings low.
• Stay neutral-to-underweight V and MA against AXP on a relative basis for 6-12 months; if integrated economics keep proving resilient, the market may narrow the valuation gap between issuer-network hybrids and pure networks.
• Add to BRK.B only on further weakness if the thesis is long-duration compounder quality; otherwise prefer AXP directly for cleaner exposure to the operating lever, not just the holding-company wrapper.