American Express Stock: 2 Reasons this 175-Year-Old Giant Still Has Room to Grow

At first glance, American Express (NYSE: AXP) doesn't look like a company built for the future. It operates in a mature industry, competes with global networks like Visa and Mastercard, and traces its roots back to 1850. That's hardly the profile of a high-growth story.

But that view misses what makes American Express unique and why it may continue to deliver sustainable growth in the years ahead.

Image source: Getty Images.

1. A unique business model

Most investors still frame American Express as a credit card lender. That's not wrong, but it is an incomplete -- and often misleading -- way to view the business.

At its core, American Express operates a closed-loop payments network, meaning it acts as the card issuer, network, and merchant acquirer. This allows it to capture a larger share of each transaction while maintaining direct relationships with both customers and merchants. The result is a higher take rate per consumer transaction and access to high-quality data.

To put it simply, its business model is spend-centric, not lending-centric. A majority of its revenue comes from:

• Discount revenue (merchant fees charged per transaction)
• Annual card fees, particularly from premium products
• Service fees

Put together, these revenue flows accounted for 76% of the cmopany's 2025 revenue. While interest income matters (it accounted for the remaining 25%), it is not the primary driver of the business. This distinction is critical. American Express doesn't need customers to carry debt to generate strong economics. In fact, its most valuable customers are often those who:

• Spend heavily.
• Pay in full.
• Use the card frequently across categories.

That combination produces high transaction volume, lower credit losses, and recurring fee income. Over time, this creates a powerful, self-reinforcing flywheel of more high-spending customers, better rewards and service, increased engagement and spend, and ultimately higher revenue per customer.

This is fundamentally different from traditional lenders, which rely on lending, making it far more resilient during weak economic periods.

2. A premium ecosystem with durable growth tailwinds

American Express is increasingly positioning itself not just as a payment provider but as a premium consumption platform. Its value proposition extends well beyond transactions into areas like airport lounge access and travel benefits, dining and entertainment experiences, concierge services, and curated partnerships. These features aim at doing one thing: drive higher spending per customer over time.

And the strategy continues to work, even today. The company has been successfully attracting younger, high-income consumers, including millennials and Gen Z professionals. For perspective, these young customers accounted for 65% of new accounts. While these customers may start with lower spending levels, their lifetime value is significant as their income and spending scale over time.

At the same time, American Express still has meaningful room to grow beyond its core U.S. market. In the fourth quarter of 2025, international card services grew volume by 12%, ahead of U.S. consumer services, which grew by 9%.

While competition has always been intense (and may intensify further), American Express has a brand moat among high-spending consumers. Holding an Amex card provides not only attractive perks but also an acknowledgment of one's social status. That allows the company to maintain pricing power with both merchants and consumers, even in a competitive environment.

What does it mean for investors?

American Express isn't trying to be the largest payments network in the world like Visa or Mastercard. Instead, it focuses on maximizing value per customer within a tightly integrated, premium ecosystem. That strategy has enabled it to grow over decades, and it remains as relevant today as it was in the past.

For investors looking for a proven company that can continue to grow at a decent rate in the coming years, American Express is a stock that should show up on their watch list.

American Express is an advertising partner of Motley Fool Money. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool has a disclosure policy.