Better Warren Buffett Stock: American Express vs. Visa

Warren Buffett is regarded as one of the best capital allocators to ever live. Because of his track record, average investors love to follow Berkshire Hathaway's portfolio moves. When stocks that the conglomerate owns take a beating, it might be time to make a move.

There are two financial stocks, American Express (NYSE: AXP) and Visa (NYSE: V), that fit the description. Both have had poor performances so far in 2026. But each is a high-quality business deserving of investor attention.

Between American Express and Visa, which is the better Warren Buffett stock to buy?

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American Express

At the end of last year, Berkshire Hathaway owned almost 152 million shares of American Express, making it the second-largest position behind only Apple. In the past decade, American Express has put up a total return of 511% (as of April 9).

One of the most notable characteristics that has led to the ongoing success of American Express is its brand strength. The company deliberately positions its products at the premium end of the market, as these cards resemble somewhat of a status symbol for clientele. This perspective is bolstered by the excellent perks and rewards American Express offers.

Consequently, American Express attracts wealthier customers with higher spending power, resulting in industry-leading charge-off rates that have a positive impact on the bottom line. And it's able to occasionally raise the annual fees it charges, like the $200 hike with the Platinum card in 2025 and the $75 increase with the Gold card in 2024. These fee bumps haven't gotten in the way of growth.

American Express is doing a wonderful job bringing on younger cardholders. "As of Q4, millennial and Gen Z customers now make up the largest share of U.S. consumer spending, and they remain the fastest-growing cohorts," CFO Christophe Le Caillec said on the Q4 2025 earnings call.

The ability for these people to be American Express customers for decades into the future provides an immense financial benefit to the business.

Visa

As of Dec. 31, 2025, Berkshire held a 0.4% stake in Visa. The position represents a tiny part of the conglomerate's portfolio. Visa stock's trailing-10-year return of 325% is much lower than the performance of American Express.

Visa's business model is different, as it doesn't engage in lending activity. It just operates the underlying payments infrastructure that connects various stakeholders in a transaction. Partner banks, like JPMorgan Chase and Capital One, issue credit and debit cards that are compatible with the Visa network.

The result is that this is one of the most profitable companies on Earth. In the past decade, Visa's net profit margin averaged an unbelievable 47.6%.

From a competitive standpoint, Visa benefits from a tremendous network effect. On one side, it has 5 billion cards in use around the world. On the other side, there are over 175 million merchant locations that accept these cards as a form of payment. As the ecosystem grows, the value proposition improves for all parties involved.

And this setup is precisely what makes disrupting Visa an almost impossible task, even though some investors are worried about the rise of stablecoins. Ideally, a competing payments system would need to be an order of magnitude better for consumers and merchants to want to adopt it. Visa is so entrenched in our economy that this doesn't appear like a probable outcome.

Comparing earnings growth to valuation

From a valuation perspective, American Express' price-to-earnings ratio of 21.3 is cheaper than Visa's 29.8 multiple. Both of these figures are much lower than they were at the start of the year. But because the former is directly exposed to credit risk, it's not going to command the same valuation as the latter.

Over the next three years, analysts expect American Express' adjusted earnings per share (EPS) to grow at a compound annual rate of 14.9%. The consensus view for Visa is that its adjusted EPS will increase at a 12.5% yearly clip.

Both of these Buffett stocks look like smart buys right now. But I think American Express has a higher chance of producing a better return over the coming five years.

JPMorgan Chase is an advertising partner of Motley Fool Money. 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 Apple, Berkshire Hathaway, JPMorgan Chase, and Visa and is short shares of Apple. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.