Berkshire Hathaway sports a massive market capitalization of $1.1 trillion. But it’s worth pointing out that $359 billion of this is represented by its huge public equities portfolio. These stocks have a big effect on the company’s performance. Among these holdings, Apple is still at the top of the list. This is despite notable selling happening in recent years.
There’s another position that deserves some attention. It represents nearly 14% of Berkshire Hathaway’s portfolio. The conglomerate has a 22.5% stake in the business whose shares have more than doubled in the past five years (as of Sept. 10).
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This financial stock is a historical winner, and investors might want to consider buying it right now.
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Passing the quality test
The second-largest holding in Berkshire Hathaway’s portfolio is American Express (NYSE: AXP). Investors know this company as a leading credit card issuer and payments network. It also offers various banking products and services.
This business passes the quality test that Warren Buffett and his successor, Greg Abel, use to operate their capital allocation policy. American Express has built up a wide economic moat that cements its robust competitive position in the financial services industry.
One key aspect of the moat is American Express’s premium brand, which exudes status, exclusivity, and luxury. The company targets affluent customers for its card offerings. These people value the perks, benefits, and rewards that they get. For American Express, acquiring these types of customers means industry-leading charge-off rates, as there’s a tighter grip on credit risk.
Similarly to Visa and Mastercard, American Express runs the underlying payments infrastructure. This connects merchants and consumers on its platform. Consequently, there’s a network effect that gets stronger as the number of merchant acceptance locations and cardholders increases over time.
Durable financial gains
American Express isn’t going to turn any heads with its growth numbers. However, the financial gains are as durable as they come. Even though this is a very mature business, the leadership team believes that over the long term, American Express can grow revenue by 10% per year. Management also thinks that earnings per share can increase at a “mid-teens” annualized rate. This is an encouraging outlook.
The most notable trend propelling sales figures is the rise of the cashless economy. As a greater number of transactions are conducted via credit cards and other digital means, it presents a tailwind for American Express. This helps result in more payment activity that flows through its network. During the second quarter, American Express processed $456 billion worth of volume. This was up 9% year over year.
Furthermore, the business is doing a great job bringing on new card members. In the latest quarter, 65% of new accounts globally came from the millennial and Gen Z cohorts, younger consumers who have higher lifetime value. These cardholders have shown a willingness to pay higher fees, supporting the argument that American Express’s premium cards have pricing power. The popular Platinum card was refreshed last September, resulting in a $200 annual fee increase to $895.
“Our Platinum portfolio is now the fastest-growing in our U.S. consumer business,” CEO Steve Squeri said on the Q2 2026 earnings call.
Shares trade well off their peak
Despite doubling in the past five years, the stock currently trades 17% off its record from December 2025. The valuation today presents a compelling entry point for prospective investors. Shares can be purchased at a price-to-earnings ratio of 19.5. I believe this makes American Express a business that every long-term investor should consider adding to their portfolio.
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American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool has a disclosure policy.
Berkshire Hathaway Has Nearly 14% of Its $359 Billion Portfolio Invested in This Winning Stock That’s Doubled in 5 Years was originally published by The Motley Fool
