Investors who have been in the market for years or decades know to take market pullbacks in stride. But new investors could find market volatility panic-inducing. It’s a great opportunity for beginner investors who might be all-in on artificial intelligence (AI) and hot tech stocks to take a step back and make sure they have some solid blue chip stocks in their portfolios that can withstand market ups and downs.
American Express (AXP 0.81%) has demonstrated quiet strength over the past few years, deftly managing through rough economic volatility, as it has done for decades. Plus, it’s trading at a great price today, making it an excellent value candidate.
The exclusive-membership model
American Express (Amex, for short) has changed over the years to meet shifting trends, but its core model of offering high-value credit cards for an annual membership fee has endured over time. It targets an affluent customer base interested in paying the annual fee to access the rewards the company offers in many forms, including shopping, entertainment, and — increasingly — sports. Its target clientele is more resilient than the mass audience, driving higher growth in spending quarter after quarter.
The 2026 first quarter was another stellar performance. Revenue increased 11% year over year, surpassing management’s 10% target, and earnings per share (EPS) were up 18% to $4.28. Luxury spending is outpacing regular spending, up 18% year over year versus 10% overall.
Image source: American Express.
Amex is achieving its goal of attracting a younger cohort of consumers who are growing along with the company, with high retention rates and higher spending over time. About 66% of the 3.1 million new cardholders in the first quarter were millennials and Gen-Zers, and 73% held fee-based cards.
It made a major card refresh last year, including higher fees, but the consumer base remains loyal, and new member acquisition remains strong. Chief Financial Officer Christophe Le Caillec said that an increase in spending on the signature platinum card isn’t just coming from new customers, but predominantly from existing consumers.
Investing for the future
Amex has remained successful over time by embracing new trends and technology and integrating them into what it does best. It recently released its Agentic Commerce Experience developer kit to allow selected partners to integrate its payments capabilities directly into their platforms. However, it’s focused on creating security protocols to protect its customers and maintain its best-in-class credit metrics.
Management is also cementing new deals with partners in all areas to reinforce its top rewards program, and it has seen particular success with its collection of fine hotels and resorts. Customer spending in this high-end category increased 50% year over year, compared to 5% growth in overall U.S. consumer lodging sales. It recently accepted 300 new properties into the program out of 1,400 applications.
Priced to buy
After the outstanding results were released, you might imagine that the stock jumped. It didn’t. The market homed in on management’s update that instead of raising the full-year outlook based on its outperformance, it was going to plow extra earnings into developing the business.
The market also might be concerned about the company’s travel segment as oil prices rise, even though management said it wasn’t worried. Travel and entertainment are a major portion of consumer spending.
Today’s Change
(-0.81%) $-2.60
Current Price
$316.24
Key Data Points
Market Cap
$218B
Day’s Range
$316.18 – $323.51
52wk Range
$257.21 – $387.49
Volume
116K
Avg Vol
3.7M
Gross Margin
60.19%
Dividend Yield
1.07%
These are short-term concerns, but they create a buying opportunity for investors. Amex fell after the report and is down 15% year to date. At the current price, it trades at a price-to-earnings ratio (P/E) under 20, which is an excellent entry point for investors.
American Express is one of Warren Buffett’s favorite stocks. Instead of stepping back as it dips, investors should follow his lead and pounce on a blue chip bargain.
