Berkshire Hathaway boasts a market capitalization of $1.1 trillion. Notably, $359 billion of this valuation is tied up in its vast public equities portfolio, which significantly influences the company’s overall performance. Apple remains the largest holding despite recent reductions in the position.
However, another position warrants close attention. It accounts for nearly 14% of Berkshire Hathaway’s portfolio. The conglomerate holds a 22.5% stake in this business, whose shares have more than doubled over the past five years (as of September 10).
Meeting the Quality Standard
American Express (NYSE: AXP) is the second-largest holding in Berkshire Hathaway’s portfolio. Widely recognized as a premier credit card issuer and payments network, the company also offers a variety of banking products and services.
This business passes the rigorous quality test used by Warren Buffett and his successor, Greg Abel, for capital allocation. American Express has cultivated a wide economic moat that solidifies its dominant competitive position within the financial services sector.
A key component of this moat is the company’s premium brand, which radiates status, exclusivity, and luxury. American Express targets affluent consumers for its card offerings, who highly value the associated perks, benefits, and rewards. By acquiring these high-value customers, the company achieves industry-leading charge-off rates, reflecting stringent credit risk management.
Much like Visa and Mastercard, American Express operates the underlying payments infrastructure, connecting merchants and consumers on its platform. Consequently, a powerful network effect emerges that strengthens as the number of merchant acceptance locations and cardholders grows over time.
Sustained Financial Returns
While American Express may not dazzle with explosive growth numbers, its financial returns are exceptionally durable. Despite being a mature business, leadership believes the company can achieve 10% annual revenue growth over the long term. Furthermore, management anticipates a “mid-teens” annualized increase in earnings per share, presenting an encouraging outlook.
The most significant trend propelling sales is the rise of the cashless economy. As more transactions shift to credit cards and digital platforms, a substantial tailwind emerges for American Express, driving increased payment volume through its network. In the second quarter, American Express processed $456 billion in volume, representing a 9% year-over-year increase.
The company is also successfully onboarding new card members. In the latest quarter, 65% of new accounts globally originated from millennial and Gen Z cohorts—younger consumers with higher lifetime value. These cardholders demonstrate a willingness to pay higher fees, reinforcing the pricing power of American Express’s premium cards. The recent refresh of the popular Platinum card resulted in a $200 annual fee increase, bringing the total to $895.
CEO Steve Squeri stated on the Q2 2026 earnings call: “Our Platinum portfolio is now the fastest-growing in our U.S. consumer business.”
Valuation Off Recent Highs
Despite doubling over the past five years, the stock currently trades 17% below its December 2025 record. This valuation presents a compelling entry point for prospective investors. With a price-to-earnings ratio of 19.5, American Express stands out as a business every long-term investor should consider adding to their portfolio.
Evaluating American Express for Your Portfolio
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