Is 2026 the Year to Buy American Express Stock?

Warren Buffett’s time as CEO of Berkshire Hathaway is done. But that doesn’t mean investors can’t learn from the Oracle of Omaha. He left his post with the conglomerate’s massive public equities portfolio holding a sizable chunk of American Express‘ (AXP +2.08%) outstanding shares.

That investment decision has worked out particularly well in recent years; shares of American Express have generated a total return of 207% in the past five years (as of Jan. 15). It might be a good idea for retail investors to take a closer look at this business.

Is 2026 the year to buy this leading financial stock?

American Express is a wonderful business

Buffett doesn’t just buy any company. One of his primary filters is that the business has to possess an economic moat. American Express shines in this area.

First off, it has an incredible brand that places it at the premium segment of the card payments market. Some of Amex’s products come with valuable perks, benefits, and rewards. And it charges high annual fees, which naturally attracts a wealthier clientele. The brand image has supported increasing fees over time.

In addition to issuing credit cards, American Express also operates the platform that connects 160 million merchant locations with 151 million active cards. Consequently, there’s a network effect at play here, with the ecosystem’s value proposition improving over time as it scales up.

Investors that take the time to understand the factors that make up Amex’s moat will struggle to not come away impressed. It’s hard to believe the company is under any threat from competition, whether that comes from fintech and stablecoin innovation or incumbent banking providers.

Valuation is a top concern

The market has a thorough understanding of just how great a business this is. After all, American Express was able to grow its revenue and net income at compound annual rates of 8.4% and 8.6%, respectively, between Q3 2015 and Q3 2025 (ended Sept. 30). With spending activity rising over time as the economy grows, coupled with the prevalence of noncash transactions, solid gains should continue.

But the valuation looks stretched today. Investors must be OK with paying a price-to-earnings ratio of 23.9 to buy this company. That represents a premium to its trailing-five-year average. Clearly, the market remains bullish on American Express.

I think the right strategy is to keep this stock on your watch list for now. If the valuation multiple declines meaningfully to below 20, then it would be a smart buying opportunity.