American Express vs. Robinhood Markets: Which Financial Stock Is a Better Buy in 2026?

Can a century-old payments giant hold its ground against a digital-first challenger in the race for the next generation of wealth? Investors are weighing American Express (NYSE:AXP) against Robinhood Markets (NASDAQ:HOOD).

American Express differentiates itself through a premium, closed-loop network that targets high-net-worth individuals and corporate clients. In contrast, Robinhood has disrupted the industry by catering to a younger, digital-native demographic with commission-free trading and crypto access. Both companies are now competing for a larger share of the modern retail investor's wallet.

The case for American Express

American Express operates an integrated payments platform and remains a prominent name among financial stocks. It serves high-spending, credit-worthy customers through a closed-loop network that reaches over 170 million merchant locations worldwide. Key partners like Delta Air Lines account for nearly 13 percent of billed business, adding a layer of risk to the business model, but the company continues to expand through new B2B integrations.

In FY 2025, revenue reached $72.2 billion, indicating roughly 10% growth over the previous year. This steady expansion was supported by increased billed business across global markets and higher interest income from its card member loan portfolios. The company reported net income of approximately $10.8 billion, which resulted in a robust net margin of about 15%.

As of its December 2025 balance sheet, the debt-to-equity ratio, which is total debt divided by shareholder equity, is roughly 1.7x. The current ratio, which measures the ability to pay short-term debts by dividing current assets by current liabilities, is approximately 0.3x. In FY 2025, free cash flow, which represents the cash a company generates after accounting for capital expenditures, reached nearly $16.0 billion.

The case for Robinhood Markets

The company serves approximately 27.7 million funded customers through its popular mobile and web applications as of mid-2026. It recently acquired WonderFi to expand its international presence into the Canadian market and continues to grow its advisory, private markets access, and digital banking services. Revenue is primarily driven by retail customer activity, supplemented by payment for order flow and transaction rebate arrangements.

In FY 2025, revenue reached nearly $4.5 billion, reflecting significant growth of approximately 51.6% compared to the prior fiscal year. This surge was largely driven by increased trading volume in equities and cryptocurrencies among its expanding user base as market volatility attracted more retail participation. The company reported net income of about $1.9 billion, resulting in a net margin of roughly 42.1%.

As of its December 2025 balance sheet, the debt-to-equity ratio is roughly 1.7x, which represents total debt divided by shareholder equity. The current ratio, which measures the company's ability to cover its short-term obligations with current assets, is approximately 1.3x. Free cash flow, calculated as cash flow from operations minus capital expenditures, reached nearly $1.6 billion in FY 2025.

Risk profile comparison

American Express faces intense competition in the payments industry from Visa and Mastercard, as well as newer fintech firms. High reliance on key partners like Delta Air Lines means the inability to renew agreements on favorable terms could materially impact results. Furthermore, the company faces ongoing regulatory scrutiny regarding its small business sales practices and compliance with global financial laws.

Robinhood faces regulatory scrutiny regarding payment for order flow and the legal viability of its newer prediction market features. Its heavy reliance on Amazon for cloud-based infrastructure creates potential operational risks if service is disrupted. The multi-class stock structure also concentrates voting power among the founders, limiting the influence of public stockholders in corporate decisions.

Valuation comparison

Robinhood trades at a higher forward P/E based on future earnings estimates, whereas American Express has a lower P/S ratio relative to its revenue.

Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Investors are often presented with choices in the stock market, and one of the most classic comparisons is between the industry giant and scrappy disruptor. It’s not totally fair to treat Robinhood like an unknown in the financial world. Its commission-free trading and access to cryptocurrency and predictions markets have made it something of a household name among retail investors. And its embrace of tech-forward trading options is a huge part of its appeal — not to mention its more than 50% year-over-year revenue growth in fiscal 2025.

But does that make it a stock to own? I’d rather hold American Express. Amex is a boring financial giant with an established customer base of high-net-worth individuals. Not only does it make money every time someone swipes their Amex, but it also charges annual fees for many of its cards and earns income on credit card balances. Those are aspects of modern financial life that, while cyclical, aren’t going away anytime soon.

Robinhood makes some money on subscription fees and interest on cash investors leave in their accounts, but its primary revenue source is transaction-based. That worked well when cryptocurrency was hot, but crypto is currently in a nine-month bear market. Prediction markets are also having a moment, but it’s hard to know whether it will last. Robinhood also makes a big chunk of its money via payment for order flow, which, along with its prediction market segment, is currently facing significant regulatory scrutiny.

There’s no denying Robinhood’s appeal or its massive growth, but I think its business model is still too risky to earn a large investment from me. It’s the price of being a disruptor, and it’s not one I’m willing to pay at the moment. I’d take American Express, its steady-but-boring business model, lower valuation, and modest dividend over Robinhood today.

American Express is an advertising partner of Motley Fool Money. Sarah Sidlow has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, American Express, Mastercard, and Visa. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.