Why American Express Is Still a Top Buffett Stock After All These Years

American Express remains Berkshire Hathaway’s No. 2 holding and is highlighted as a long-term core position, supported by its closed-loop payments network, premium brand, and high-spend customer base. The article notes 2024 average Amex transaction size of $150 versus $94 for Mastercard and $91 for Visa, plus a Q1 net charge-off rate of 2.3% versus Capital One’s 3.7%. The piece is largely a bullish long-term investment commentary rather than a new company-specific catalyst.

Analysis

The incremental message is less about American Express and more about the market reaffirming a scarce asset: a branded, closed-loop payment franchise with both underwriting and network economics. In a sector where pure-network operators are increasingly exposed to mix shifts toward lower-fee rails, Amex’s ability to monetize affluent spend and cardholder fees gives it a more durable take-rate floor and better downside capture in a soft landing than the market typically credits. That makes it one of the few financials where “premiumization” is not just marketing—it directly supports unit economics and credit quality.

The second-order read-through is negative for Visa and Mastercard on the margin, not because they are structurally impaired, but because the article reinforces a valuation distinction: open-loop networks win on ubiquity, while Amex wins on monetization density. If affluent consumer spend remains resilient, merchants may grumble but still pay for access, which protects Amex’s pricing power; if spend broadens down-market, Amex’s moat narrows and the relative multiple gap should compress. The fact that Berkshire exited the other two networks while holding Amex also acts as a subtle sentiment filter against the “all payment rails are equal” narrative.

Risk is that the bull case is late-cycle sensitive. Amex’s model is most vulnerable if the consumer shifts from affluent to merely employed: high-spend cohorts can remain sticky, but a deteriorating employment picture would pressure travel, dining, and discretionary categories quickly over 1-2 quarters. The other underappreciated risk is regulatory or merchant-routing pressure that could force concessions on fees, which would matter more to Amex than to diversified incumbents because its economics are more concentrated.

Contrarian takeaway: the stock may be fine, but the setup is better for relative-value than outright chasing. The market may already be paying up for quality balance sheet and buybacks, while underestimating how much of the moat is already in the multiple; the cleaner trade is owning the highest-conviction business model and shorting the weaker fee-taker that is more exposed to network commoditization.

Key Decisions for Investors

• Long AXP / short V, 3-6 month horizon: express the view that premium customer monetization and closed-loop economics deserve a relative premium; target a 5-8% spread capture if risk sentiment stays stable.
• If already long AXP, add on any 3-5% pullback rather than strength: use weakness to build a 6-12 month core position, with upside driven by continued buybacks and resilient charge-off trends.
• Sell covered calls against AXP into event-driven volatility over the next 1-2 quarters: monetize what is likely a fair-to-full valuation while preserving downside participation from the quality factor bid.
• Pair MA vs AXP only if you want cleaner factor exposure: long AXP / short MA for 3-6 months to isolate the market’s willingness to pay for concentrated premium spend versus scale alone; risk is a rotation into open-loop growth if consumer spending broadens.
• Avoid initiating fresh shorts in V/MA solely on this headline; wait for a catalyst such as fee-regulatory noise or macro slowdown before leaning into the relative underperformance thesis.