American Express Stock Is Cheap, But Does That Make It a Buy Now?

Key Points
The worry is that specialized AI models could be trained to favor purchases that bypass the fees that credit card issuers and processors charge.
This overlooks several factors that make credit cards appealing, however.
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American Express (NYSE: AXP) stock hasn't been the fast train to wealth in 2026. The credit card giant's stock is trading down by almost 21% year to date, a notably steeper fall than the 4% dip of the benchmark S&P 500 index.
It's not the company's fault. These days, many investors are fearful of how the relentless progress of artificial intelligence (AI) could negatively affect legacy businesses like Amex's. I think they're temporarily underestimating the company's power, and the sticky appeal and utility of its cards.
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Agents of fortune
It might seem like a stretch for folks to worry that AI could drain the fundamentals of a well-entrenched financial powerhouse like American Express. There's a logic to it, though -- next-generation "agentic" AI models can hypothetically be tasked with finding the lowest possible price for a good or service. That process would surely include reducing or eliminating as many fees as possible.
Amex and other card giants, such as Visa and Mastercard, rake in billions of dollars in fees from transactions made with their cards. The worry is that these rivers will run dry because AI agents use low-cost (or even free) transaction methods, such as the more popular stablecoin cryptocurrencies.
It's almost indisputable that AI will be a disruptive -- in some instances, even destructive -- force in the business world. But I think the card giants, and Amex in particular, have wide enough moats to withstand the coming force of AI.
First, when properly managed, a credit card (or any form of debt, come to think of it) is an important, powerful tool. Think of a purchase on such plastic as an instant loan that you don't have to pay back for days or weeks. An AI agent laboring to get the lowest possible price is likely going to use an instrument that isn't debt, meaning a consumer will need to have funds on hand ... and debit them immediately.
Second, one of the great selling points of Amex cards is the extensive rewards program they grant access to. The more that cardholders (whoops, Amex calls those people "members") spend, the more they rack up in rewards. These can be substantial -- there are many stories of happy travelers funding trips to attractive destinations through the program.
These days, similar programs are rife throughout the credit card world (although I have to say it took many issuers years, if not decades, to even approach Amex Rewards), as are cashback rewards. So the perks are a moat on their own, not only for Amex, but also for the third-party issuers behind Visa and Mastercard programs.
Finally, there's the prestige that Amex carries, which is a major factor behind the appeal of its higher-end cards, at least.
After all these years, the Amex Centurion Card (aka The Black Card) remains the ultimate transaction tool for many consumers. It's widely accepted, there's no limit, the list of perks is long, and there's cachet in just having it in a wallet. That's a reputation built over a vast stretch of time, and I doubt it'll be under serious threat from even the most advanced bargain-sniffing AI agents.
The moats will hold for American Express
I think the worst-case scenario is that such AI models develop price-hunting services that undercut the annual fees Amex and other issuers sometimes charge for their prestige products (for example, JPMorgan Chase's two Chase Sapphire cards). These can be hefty, and if digital competition gets hotter, issuers might have to cut or even eliminate these.
Happily, they're not foundational to the business of these companies. Again, those back-end fees -- not paid directly by the customer, mind you, but channeled to the issuer and transaction processors -- are where the real action is. Note: In Amex's case, it also functions as an issuer, so it generates revenue by charging interest on the balances held by its members.
So with Amex, I think we can expect continued outperformance. Given the company's sprawl and size, it sure manages to grow its fundamentals at impressive rates, a testament to the effectiveness of its business. In 2025, its annual revenue rose 10% over the prior year to almost $19 billion, while headline net income jumped 13% to nearly $2.5 billion, for an enviable 13% net margin.
Analysts, at least, don't seem to be fearing an AI apocalypse for Amex soon. Their consensus for annual top-line growth this year is 9%, while that for per-share net income is a meaty 14%.
So, yes, Amex is a bargain stock these days after the recent sell-off -- and, double yes, it's a buy for me.
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JPMorgan Chase is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, Mastercard, and Visa. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.