Is American Express a good long-term investment? Its buy-and-hold prospects explained
Like getting a driver's license or graduating from college, owning a credit card is considered a rite of passage into American adulthood.
Credit card companies typically attract young customers by offering them "no fee" cards with few benefits. These companies assume, because of their cardholder's limited credit history and lack of disposable income, that they can't afford the fees that come along with more premium perks.
But Stephen Squeri turned that model on its head when he became American Express's CEO in 2018 - and shareholders have been amply rewarded since.
Mindful of his four daughters' tastes for the finer things in life, Squeri understood that affluent young people have no problem paying for a premium card - so long as they receive perks they actually want.
"The reality is," Squeri told Fortune, "these Gen Z and Millennials love premium, they love getting something that's luxe. I viewed them as educated consumers who love luxury. They also love value. I said, ‘Wait a minute, these kids are smart.'"
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Amex's turnaround story
But Squeri inherited a company in crisis, one that was still reeling from the 2015 loss of its partnership with Costco, which had accounted for 10% of American Express' global business. In addition, increased competition from premium cards by Chase and Capital One challenged Amex's once-dominant position in the luxury credit card market.
And so, Squeri "doubled down" by increasing Amex's marketing budget to focus heavily on the digital and search channels Millennials and Gen Z use - spending $4.1 billion in 2018 alone, according to the company's 10-Q.
He also orchestrated major overhauls with its Gold and Platinum cards, while drastically raising their annual fees. The revamped Gold card, for instance, introduced four times greater perks at restaurants and grocery stores, while its annual fee increased from $195 in 2017 to $325 in 2026.
Changes to Amex's Platinum card were even more dramatic: Cardmembers received access to over 1,550 airport lounges, Uber One perks, and statement credits on Lululemon, Resy, and Ōura - all for an $895 annual fee in 2026 (a $345 increase from 2017).
A bright young future for Amex
Squeri's big bet paid off - big time. Millennials and Gen Z now make up over 60% of all new American Express accounts, and they are spending more each year.
They are also using Amex's digital services, such as its app, more than older generations do, which allows them to enjoy special programs and perks, like the Amex-only events at the Coachella Music Festival.
And that "member since" designation provides Millennials and Gen Z with priceless intangible benefits, too, like status.
Squeri sees a lifetime of value in these premium customers. Speaking at the 2024 Goldman Sachs U.S. Financial Services Conference in New York, he described this new demographic by saying, "They don't spend as much right now as a Gen Xer or a [Baby] Boomer, and they don't borrow as much, but we believe they'll have 20 more years of relationship with us."
The proof is already apparent in AXP's earnings. In the years since Squeri began leading the company, American Express shares have delivered 16.6% annual returns, beating JPMorgan Chase (JPM), Visa (V), and even the S&P 500.
Amex posted continued strength in the first quarter of 2026, as well. It reported $18.91 billion in revenue, which was an 11% increase over 2025, and earnings per share of $4.28, an 18% increase over the prior year. These results were 7.2% higher than analyst estimates.
Its youngest cardholders were responsible for the majority of Amex's year-over-year spending growth, with Gen Z up 38% and Millennials up 13%, while Gen X increased 8% and Baby Boomers just 4%.
The company also raised its quarterly dividend by 16% to $0.95 per share, or $3.80 per year, which is yet another signal of Amex's financial wellness, as it demonstrates stable cash flow and management's confidence in the future.
Related: Where is American Express' headquarters? Why the company is moving to 2 World Trade Center
What could slow Amex's momentum?
While Amex's transformation under Squeri has been remarkable, even the best investments come with their share of risk, and so investors must also consider the challenges that could affect Amex's trajectory in the coming years.
For one, Squeri can't control the broader economy, and his business remains highly dependent on consumer spending.
A recession, for instance, could impact travel, entertainment, and discretionary purchases - even for the affluent customers Amex relies on.
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Traders on the prediction market Kalshi estimate a 41% chance of a recession happening in 2027, due to fears that the "cracks forming today" in the economy, in terms of volatile energy prices, elevated consumer credit balances, and pressures on corporate refinancing - both stemming from higher interest rates - come to a head.
That doesn't mean a recession is inevitable. In fact, Kalshi had also predicted a 36.9% chance of a recession happening in 2026 up until April 2026, but certain facts - that corporate earnings continue to outpace estimates, the unemployment rate has remained steady at 4.3%, and the S&P 500 is posting record highs - have led many to believe that the economy is stronger than previously estimated, at least for now.
In addition, competition in the premium credit card market remains red-hot, as JPMorgan Chase and Citigroup have all taken a page from Amex's playbook and rolled out their own premium offerings.
The Chase Sapphire Reserve card, for example, is considered the closest rival to Amex's Platinum card - it offers a variety of travel and dining credits while sporting a lower annual fee of $795. The Capital One Venture X card provides access to the Capital One airport lounge, among other perks, and has a significantly lower fee, at $395.
Related: History of American Express: Company timeline & facts
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This story was originally published June 10, 2026 at 5:52 AM.