Date

Aug. 18, 2025 at 5 p.m. ET

Call participants

Chief Executive Officer — Thiago Maffra

Chief Financial Officer — Victor Mansur

Operator

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Risks

Thiago Maffra explicitly stated, "2025 has demonstrated to be more challenging than we estimated, demanding more efforts from all our teams to keep growing our business in a profitable way," signaling a difficult operating environment affecting growth initiatives.

CFO Victor Mansur noted, "If the banks that give credit to their clients keep asking for investments in terms of reciprocity, we may suffer a bit more in Q3 and Q4 2025 since we are not going into this business," highlighting risk of continued corporate net outflows.

"Bear in mind, that we can have a change in tax rules which can impact currently tax-exempt fixed income instruments," Maffra stated, flagging regulatory uncertainty that may influence product demand and capital market activity.

Takeaways

Total client assets (AUM + AUA)-- BRL 1.9 trillion as of the latest quarter, representing 17% year-over-year growth.

Gross revenues-- BRL 4.7 billion, up 4% year-over-year and 2% sequentially in Q2 2025.

Retail revenue contribution-- 77% of total gross revenues came from the retail business in Q2 2025.

Net income-- BRL 1.3 billion, up 18% year-over-year and marking the highest quarterly figure in company history for Q2 2025.

Return on equity (ROE)-- 24.4% for the quarter, expanding 223 basis points year-over-year.

Capital ratio (BIS)-- 20.1%, up 110 basis points quarter-over-quarter in Q2 2025.

Active clients-- 4.7 million as of the latest quarter, up 2% year-over-year.

Diluted earnings per share (EPS)-- Diluted EPS grew 22% year-over-year in Q2 2025, outpacing net income growth due to share buyback execution.

SG&A expenses-- BRL 1.6 billion in Q2 2025, up 10% year-over-year and sequentially, mainly due to higher marketing and technology investments.

Efficiency ratio-- Improved to 34.5% for the last twelve months, a 161 basis point improvement versus the prior year.

Retail net new money-- Positive inflows in retail were offset by a $6 billion outflow in the corporate and institutional segments in Q2 2025, due to tighter liquidity and increased reciprocity requirements from banks for credit lines.

Retail credit card TPV-- Credit card volume grew 8% year-over-year in Q2 2025; affluent and private banking card offerings were launched.

Life insurance written premiums-- 45% year-over-year growth as of the latest quarter, with management highlighting early-stage potential.

Retirement plan client assets-- BRL 86 billion, up 15% year-over-year in Q2 2025.

New retail product revenues (FX, global investments, digital account, consortium)-- $256 million, up 146% year-over-year in Q2 2025, with consortium gaining traction from a zero base.

Issue services revenue-- Down 30% year-over-year and 5% quarter-over-quarter in Q2 2025 versus the all-time high in Q2 2024, due to softer DCM activity.

Corporate revenues-- Up 14% year-over-year and stable quarter-over-quarter, buoyed by derivatives solutions in Q2 2025.

Fee-based model penetration-- 5% of total client assets as of Q2 2025, with potential for gradual growth toward 7%-8% in the coming years.

Share buyback program-- BRL 1 billion buyback program to be executed through next year, with a target for total capital returns above 50% of net income for 2025 and 2026.

Summary

XP(NASDAQ:XP) delivered record net income (GAAP) and expanded profitability in Q2 2025, achieving significant increases in retail-driven revenues and asset growth despite a challenging macroeconomic environment and headwinds in the corporate and institutional segments. Management reaffirmed its 10% top-line growth target for this year, supported by new products, channel diversification, and ongoing expansion of sales teams, while warning of potential volatility from upcoming tax policy changes and continued pressure on corporate net new money. Shareholder returns remain a top priority through both elevated capital ratios and a defined buyback, even as SG&A increases outpaced revenue growth due to marketing and technology outlays.

Maffra said, "we are convinced that we have a more sustainable revenue model and profitability is a consequence," highlighting management's confidence in the business model's adaptability.

Mansur noted, "the EPS growth pace was again faster than our net income growth" in Q2 2025, directly linking share buybacks to EPS expansion.

Management outlined that while fee-based models lower take rates slightly, they drive higher wallet share per client, likely compensating for revenue compression over time.

Upcoming tax regulation changes could alter DCM market conditions and affect asset warehousing strategy, as highlighted by both Maffra and Mansur.

Retail cross-selling and the rollout of new verticals—especially in insurance, retirement, and global products—are driving incremental revenue streams and diversification benefits.

Corporate and institutional segment outflows were described as closely tied to banks' requirements for investment reciprocity tied to lending activity, a risk that may persist.

The efficiency ratio has improved by 161 basis points year-over-year to 34.5% for the last twelve months, but guidance calls for near-term stability in light of ongoing investments in platform and personnel expansion.

Industry glossary

GCM (Global Capital Markets): Segment encompassing primary and secondary debt and equity capital markets origination and distribution activities.

DCM (Debt Capital Markets): Area focused on the structuring, issuance, and distribution of debt securities for corporate and institutional clients.

AUM (Assets Under Management): Total market value of investments managed on behalf of clients.

AUA (Assets Under Administration): Assets that a financial institution administers or holds on behalf of clients, without managing investment decisions.

IFA (Independent Financial Adviser): A financial adviser not tied to a single provider who offers clients a range of product choices and is remunerated by transactional or fee-based models.

TPV (Total Payment Volume): Aggregate value of transactions processed through credit cards or payment services.

BIS ratio: Regulatory capital adequacy ratio calculated under Basel guidelines, indicating the strength of a financial institution's capital base relative to risk-weighted assets.

CET1 (Common Equity Tier 1): Core measure of a bank's financial strength from a regulator's point of view, focusing on common equity capital relative to risk-weighted assets.

VaR (Value at Risk): Metric indicating the maximum expected loss with a given confidence level over a specified time horizon.

Take rate: The proportion of client assets from which recurring revenues are generated.

Full Conference Call Transcript

Thiago Maffra: Good evening, everyone. I appreciate you all joining us today for the second quarter 2025 earnings call. So half the year is already behind us, but there is much more to come. We are still working hard, I would say, in an obsessed way to keep evolving our clients' journey experience and product offering. 2025 has demonstrated to be more challenging than we estimated, demanding more efforts from all our teams to keep growing our business in a profitable way. As a result, we are continuously increasing our profitability. Now analyzing the main KPIs. The first one is client assets, AUM, and AUA, for which we posted BRL1.9 trillion, a 17% growth year over year.

Total advisers accounted for 18,200, representing flat figures year over year. On active clients, we posted 4,700,000 clients, with 2% growth year over year. During the quarter, gross revenues marked BRL4.7 billion with a 4% growth year over year. EBT year over year is 5% lower, reaching BRL1.3 billion, mainly because last year, we had positive impacts from overhead, turning this quarter not like for like. And on the bottom line, it's another record. We achieved the highest net income in our history, reaching BRL1.321 billion. It represents an 18% year over year growth. On profitability, we achieved 24.4% ROE during the quarter, a 223 bps expansion versus the second quarter of 2024. 10 out of 11 quarters posting growth.

This means 10 out of 11 quarters posting consecutive growth. On capital ratio, we printed a comfortable level at 20.1%, representing an increase of 110 bps quarter over quarter. Regarding diluted EPS, we posted 22% growth year over year, another in which it grew faster than net income, driven by our share buyback program execution. As we speak, we still have a share buyback program of BRL1 billion to be executed until next year. As I mentioned during last quarters, our capital distribution plan is aligned with our guidance, and we will operate the business with a base ratio between 16-19%. Now let's see more details on the next slides.

Since last quarter, we have been sharing new info to provide a better understanding of our ecosystem, considering institutional clients in total client assets and provided assets under management from our asset management business and AUA from our fund administration business. Said that, our total clients AUM and AUA comprehend almost BRL1.9 trillion, which represented a 17% growth year over year. On the right hand of the slide, is presented how net new money evolved. This net new money is only related to client assets. This quarter, we marked billion dollars in retail net new money and minus $6 billion in corporate and institutional.

It's important to mention that during the second quarter, SMEs and large corporates net new money reflected the dynamics of the current macro scenario. First, due to payment of higher interest expense, companies have less liquidity than before. Second, in order to minimize this liquidity constraint, some companies withdrew part of their investments with us as they were used in reciprocity for credit lines with other players. On the retail side, the lower tax-exempt volumes in GCM impacted primary offerings allocation and consequently the net new money coming from individuals. We keep developing our product offering and capabilities to constantly offer the best investment alternatives to clients, which should drive higher net new money in the long term.

I would say that the current environment has proven to be more challenging than we expected at the beginning of the year, especially for investment banking origination activity. However, we still have a better GCM pipeline for the second half of the year, new investment products offering, and other initiatives supporting our efforts to achieve retail net new money averaging $20 billion per quarter this year. On the next slide, let's delve into our retail strategy. Here, I would like to address some topics which are connected to our business model. Today, the company presents a more complete ecosystem with retail, institutional, and corporate divisions fully integrated to generate investment opportunities. This benefits us in many instances.

One of them is the fixed income platform in which we are much more complete now, being one of the largest distributors of midsized banks' time deposits. Second, innovative in developing new instruments such as the Boundary Pack Structure Notes. And third, also having a robust wholesale bank franchise with a corporate secured book to serve retail clients. As part of our business model, to engage clients on another level, we also launched new verticals in strengthening our investments portfolio while attending clients' demand in banking, insurance, retirement plans, global account, FX, and now consortium. This competitive ecosystem enabled us to present higher profitability during the last years.

And there is much more to do since we will keep investing in channel diversification, expanding sales teams, improving our product platform experience, with a more accurate client offering, and improving our intelligent segmentation. Recently, we also launched new guidelines to the AFAs, sharing our knowledge, tools, and methodologies, focusing on an opportunity to increase productivity, responsiveness, and efficiency. And independently, if it's through XP internal teams or AFAs, we also developed and agreed in a new and more comprehensive way to serve our clients. New rules are aligned with one objective, to improve client experience. Our main goal is to keep serving clients with excellence no matter in which channel or remuneration model they have chosen.

With this new way of growing business, we are convinced that we have a more sustainable revenue model and profitability is a consequence. For sure, the current diversified ecosystem defines XP as a defensive business with long-term growth. We are confident that our unique business model will keep evolving to achieve our long-term goals, which is to become the leader in investments in Brazil. Moving to the next slide. We see on the left-hand side how we serve clients with different models, channels, and how XP is remunerated. By the way, we have already launched a fee-based model a long time ago, anticipating what's becoming reality today.

It means that IFAs and internal advisers can attend clients with transactional fees or fee-based model, according to clients' preference. We also have RIAs and consultants which work in a fee-based model, attending clients with asset custody in different platforms. What we see today from the client perspective is a higher demand for fee-based model when compared to the recent past. Today, the fee-based model represents only 5% of our total client assets. Looking at developed markets, for example, the US, the fee-based model achieved around 50% share of clients' assets. If this is a trend in Brazil, we are ready to serve our clients.

Our capacity to attend clients with different models differentiates us from competitors and it's translated into more share of wallet and longer lifetime. Moving now to the next slide, about retail cross-sell. As we have stated before, we have implemented new initiatives and products to diversify our revenue streams during the last years. Starting with credit card, it grew 8% year over year marking billion in TPV during the quarter. As we anticipated last quarter, we launched new products targeting affluent and private banking clients. We estimate that with the new value proposition, cards should accelerate in the next years. Life insurance written premiums posted 45% growth year over year.

As we said in recent quarters, our insurance business is a growth avenue which is still at its early stage. Since it presents a huge penetration potential, we understand that we'll keep growing at a fast pace on a quarterly basis. On retirement plans, our client assets posted 15% growth year over year on the second quarter and reached BRL86 billion. We keep expanding our sales force to increase our relevance in this industry, since our market share is mid-single digit and there is a relevant addressable market to penetrate during the next years. In new products, we consider FX, global investments, digital account, and consortium.

Altogether, they presented 146% growth year over year, with revenues reaching $256 million this quarter. It's important to note that consortium came from scratch and it's gaining traction month after month. Moving to the next slide, we will address our wholesale bank evolution. Taking GCM into consideration, this quarter we saw decent industry volumes, but not close to last year's. Coupled with that, some players became more aggressive in pricing, trying to gain market share, and therefore resulting in lower fees. Finally, tax-incentivized products have lost share in total industry volumes during this quarter. For the next quarter, the pipeline is solid, we have more opportunities and there is a chance to reaccelerate our revenue growth.

Regarding XP's broker dealer, it was another positive quarter, and we became the leader in the local industry with 17% market share. As we saw this quarter, we still expect to see improvements bit by bit until 2026. This quarter, we kept the same size of our corporate securities book with BRL34 billion. Bear in mind, that we can have a change in tax rules which can impact currently tax-exempt fixed income instruments. We are now expecting to increase this book during the year. The rationale behind this is that companies will try to anticipate their debt issuance before the change.

Also for next year, with elections in sight, we are likely to see increasing volatility and therefore a reduction in corporate clients' appetite for new issuance. So our strategy, that being the case, is to keep this warehouse book and sell it to our retail clients during the next year. To conclude my presentation, I would like to reinforce that our innovative offering, advisory model, costs, and capital discipline, are translating into higher profitability, even considering the more challenging scenario. Our ecosystem is way more complete than years ago, and there is a big opportunity in front of us to expand our core business, our retail cross-sell, and our wholesale activity.

We are confident that by executing this, we reach our goals regarding market leadership in investments and also regarding our long-term growth. Now I will hand it over to Victor who will provide a deeper look into our financial performance this quarter. And I will be back for the Q&A session.

Victor Mansur: Thank you, Thiago. Good evening, everyone. It's a pleasure to be here with you to discuss our financial performance for 2025. Starting with total gross revenues. Total gross revenues for the quarter reached BRL4.7 billion, representing a 4% increase year over year and a 2% increase quarter over quarter. It was another quarter that retail gained in total revenues, now representing 77% out of total. This quarter, once again, our main driver for retail growth year over year were fixed income and other retail, which includes retail's new verticals, such as global accounts and consortium. On the wholesale bank, corporate was the highlight, partially offsetting the negative impacts on issue services due to a tough comp from 2Q 2024.

I will share more details during the next slides. Retail revenue posted billion in the quarter, a 9% growth year over year and a 4% growth quarter over quarter. The quarter growth was mainly driven by equities, which presented a higher ADTV in the period. Equities printed slightly more than BRL1 billion, with several percent growth quarter over quarter. A year over year perspective, fixed income was the main contributor, growing 20% and reaching BRL988 million in revenue. It's important to mention that in other retail concepts, the main contributor is the float per month durations, where we had higher average volumes if high interest rates during the quarter.

Now let's move to the next slides with corporate and issue services. Before moving to the quarter results, it's important to mention that on 2Q 2024, we posted all-time high corporate financial services revenues backed by a strong DCM activity. Therefore, have a tough comp for this quarter. Issue services presented million, minus 30% year over year and a minus 5% quarter over quarter. On the other hand, corporate revenues posted a solid 14% increase year over year and was flat quarter over quarter. It reached million, supported by our capacity to offer different solutions to our clients, mainly if derivatives. Moving on to the next slides, we will explore our SG&A and efficiency ratios.

Our SG&A expenses totaled BRL1.56 billion in this quarter with a 10% growth year over year and also quarter over quarter. We keep investing in our business and this quarter, we had a higher expense in the non-people category. Most of it explained by marketing and technology investments. During the quarter, despite this slower pace in your revenue growth, our operational cost discipline supported our efficiency ratio at 34.5% last twelve months. When compared to last year, efficiency ratio improved 161 basis points.

We will keep our plan to improve our business efficiency, and this will come in parallel with new investments that will continue to be made aiming to enhance our tech platform, our product offerings, and sales team expansion. Moving to the next slide, let's see our EBT. Just to recap, last year, we had positive EBT impact from the overhead related to the head of certain assets and liabilities. Therefore, EBT is not like for like one or comparison. On 2Q 2025, we printed BRL1.3 billion EBT, which represented a 4% increase quarter over quarter. Even considering the issue services impact on our revenues, we are able to expand our EBITDA margin by 50 basis points.

On the next slide, we see the net income. Net income achieved BRL1.3 billion, an 18% growth year over year and a 7% growth quarter over quarter. Net margin expanded by approximately 130 basis points quarter over quarter and 320 basis points year over year, reaching 29.7% in 2Q 2025. In your revenue mix for this quarter, higher secondary market activity compensated lower volumes on investment banking, impacting our effective tax rate. This translated into a new record high net income for a quarter, with significant EPS growth. Let's focus on earnings per share and ROE details over the next slides. Our diluted EPS in 2Q 2025 reached BRL2.46 per share.

As we continue the execution of our share buyback program, canceling the respective shares acquired, the EPS growth pace was again faster than our net income growth. In the quarter, our diluted EPS posted 22% growth while our net income grew 18%. Both on a year over year basis. Our OTE market 30.1%. Two ninety basis points higher year over year. Our ROE grew on a yearly and a quarterly basis reaching 24.4%. This represents two thirty basis points increase in comparison to the same quarter last year. These numbers I have just mentioned are important indicators that we keep generating consistent income returns to our shareholders. Finally, moving to capital management.

As we have planned, we keep our target of distributing dividends and securing share buyback programs. Combined, their volumes should be above 50% of net income for 2025 and 2026. We already have a share buyback program of BRL1 billion to be executed until next year, and new announcements will be made according to the Board of Directors' decision. Moving to the second part of capital management on the next slide. This is the last topic of my presentation. And we can see on the left-hand side that our BIS ratio in a very comfortable level of 20.1%. On the same rationale, our CET1 is at 18.5%, which is way higher than peers' average of 12%.

On the high hand side of the slide, we can see that our total RWA to total asset ratio was 27%. Which represents the third reduction in a row and 4% lower year over year. Total RWA remained steady quarter over quarter and grew 9.8% year over year, reaching BRL101 billion. As I said last quarter, RWA should grow at a moderate pace when compared to net income, and it was the case in this quarter. Since net income posted 18% growth year over year. As Maffra said before, the potential new tax regulation may change the DCM dynamics and therefore impacting our willingness to warehouse assets to distribute during the 4Q and 2026.

It's important to highlight that our VaR marked 13 basis points of our or R28 million dollars demonstrating our risk discipline since it was 4% lower year over year. And now we can go to the Q&A.

Operator: Okay. We're going to start our Q&A session. And the first question is from Eduardo Rosman from BTG. Eduardo, you may proceed.

Eduardo Rosman: Hi. Hi, everyone. Now my question here is on capital generation and dividends and buybacks. Right? So just help us understand a little bit more your capital generation because it seems that you've been able to improve it this quarter. Actually, you are growing your capital base, I think, faster than your net income. Right? So you're still way below the level this year the level of buybacks and dividends when compared to last year. Right? So can we see an acceleration of that now in the second quarter? How do you see that? We see that you have this soft guidance of above 50%, you know, for 2025 and 2026. But can you please help us with more details?

Thanks.

Victor Mansur: Hi, Rosman. Good evening, Thank you for your question. First dividing the answer here in some parts. First one, as we anticipated the net income would grow a bit faster than the RWA over this year. Delivering some leverage in capital terms. And I think that was the case. Also, as you comment we didn't distribute as much of the net income as we generated over this quarter. The second part, we are still capturing a bit of leverage over the 4.966 new regulation. And the benefit will be delivered over the year in the DRC and market risk, principally in the credit spread risk inside of market risk.

The second part will be delivered over the risk-weighted assets operational risk. Also, we expect to see that over the next quarters. Another part here talking about the trend for the year. We expected to see the RWA growing slower than the net income. And the new tax regulation may change a bit the dynamics of the DCM market. And depending on how it goes, we may warehouse a bit faster than initially expected to take advantage of the demand from clients to issue before the regulation takes place in 2026.

Even though we don't expect any of those to impact our targeting our target to pay more than percent of our profit this year because we still have a lot of spare capital. And remember here, our CET1 ratio is at 18% and the average of the industry is at 12%. So a lot of space So we may announce the rest of the payout over the rest of the year. And the discussion between dividends and buybacks depend on the price of the stock, and we need to discuss that for board.

Eduardo Rosman: Crystal clear. Thanks a lot, Victor.

Operator: Next question is from Yuri Fernandes, JPMorgan. Yuri, you may proceed.

Yuri Fernandes: Thank you, Victor. I have a question regarding our corporate like, corporate lending strategy. I know it's something small for you. But you have been discussing new products, new strategies, and a question I have is if corporate really matters, for the entire ecosystem, when we go through your AUT, we see that the commercial is the portion, like, not growing as much and, like, actually, it creates an AUC and that's the money the same. So just trying to understand if you how is your perception about corporate training and if you believe this could be something that is missing for your ecosystem and your trucking? Thank you.

Victor Mansur: Hi, Yuri. This is Victor. Thank you for the question. Our idea, incorporate lending is the same as other product we originate to sell. You may see the corporate book growing, but everything that we put in, we expect to put out at some moment in time. So the growth you see in the credit portfolio is exactly that. The portfolio grew hopefully BRL3 billion. And that will go under a securitization and we're going to sell those assets over the next quarters.

Yuri Fernandes: No, thank you, Victor. But I don't believe like being more or less active here it's it's you know, could be more helpful for your operation.

Victor Mansur: Yeah. Yes. It could, but the same as kept markets we have our risk appetite and if you are buying credit to sell or originate a security to sell, it occupies the same risk space. So we are not going to increase our portfolio over our risk appetite because of any other strategy because they use the same pocket.

Yuri Fernandes: You know? Perfect. Thank you.

Operator: Okay. Next question is from Thiago Batista, UBS. Thiago, you may proceed.

Thiago Batista: Hi, guys. Can you hear me?

Thiago Maffra: Yes. We can.

Thiago Batista: Okay. Hi, Thiago. I have two questions. Maffra, in the beginning, you commented about the new initiatives to try to speed up the net new money on XP in the second half of the year. Can you give us a little bit of more details about those initiatives? Second one, about the guidance for next year. Are you still comfortable with the guidance that you gave, I would say, two year two or three years ago? If you look to consensus for this year on top line, consensus is something close BRL20 billion of top line. So to achieve the low end, you need to expand 14%, 1.5% next year.

Seems it's still feasible, but, I wanted to hear, for you guys, if guidance for next year is still, achievable.

Thiago Maffra: Thank you for the question, Thiago. The first question about, net new money. As we mentioned on the presentation, we still see the $20 billion per quarter in retail as a reasonable level for the next, quarters. Of course, if see a change in the macro environment, starting, interest rate cuts or, something like that, we should see the $20 billion accelerating. But for now, that's the level that we are, comfortable. Of course, this quarter, was a little bit tougher on SMBs and corporate lending, but on and corporate segment, but we are confident that the $20 billion is, it's a good it's to a good level. How we get there?

There are a lot of, initiatives in the company. If you go back a few years, I would say that the main one was channel diversification. Back in 2021, we only had one channel, what we call the B2B, the IFA channel. Today, we have the internal advisers. We have the RIA model. So if you look the numbers today, more than half of the net new money is coming from the new channels. And we keep investing in increasing the number of internal advisers, the number of IFAs on our network. So one of the, levers here.

The second one when you have, a tougher, environment, and higher interest rates competing with product, CGs from the banks, especially the tax-exempt ones, it's not that easy. So all the time, we are creating new products to compete with the banks. We just launched some new products here this quarter. They are performing very well. It's a type of fund with senior trench and it's a Selic rate here and tax-exempt. So it's a very good one. So we are all the time trying to create products to compete with the banks. And we do also partnership with some of the public banks and some other banks, through auctions or through bilateral distribution.

So all the time, we are trying to originate products I would say the third one in probably the most short term and effective, tool here It's how we increase the productivity of our IFAs. Okay? So we have been investing a lot of time. As I said, on the first quarter, now helping the IFA channel to increase productivity through technology, through sales management. We have some people in some of the operations and we are seeing the numbers starting to pick up.

And the last one, but it's more like I would say, medium term, we have been investing a lot on increasing the level of service, the way of serving our clients through financial planning, through wealth planning, session, tax planning, and so on. We have created our own internal models. We have been training all day at face. But I would say here is more like a medium term especially on the current scenario where buying SCG at 15%, it's, probably, a good option for some of the investors, and it's harder to make them move to XP.

But on the medium term and long term, for me, this is the biggest, opportunity we have, like, increasing the way of serving in the market and creating a new level of servicing investment in Brazil. And the second question was guidance for next year. Yeah. Yeah. We are still pursuing the guidance for year. Of course, right now, we are, like, pursuing the bottom of the guidance, okay? But we are still pursuing. For this year, we believe that the number for revenue that we are pursuing is still around 10%. Of course, you saw the numbers for the first half of the year. They are a little bit lower, five and a half percent.

Against, 10, but we are very that the numbers will accelerate on the second half. And the growth rate will be higher on the second half than the first one. Okay.

Thiago Batista: Thanks, Thiago. That's very clear.

Operator: Okay. Next question is from Mario Pierry, Bank of America. Mario, you may proceed.

Mario Pierry: Hey, guys. Thanks for taking my question. Maffra, can you give us a little bit more color on the inflows so far in the third quarter? Because, again, it sounds as if you're confident that you can return to this $20 billion per quarter. Are you seeing have you seen so far the first half of this quarter a number close to that level that gives you confidence? So that's my first question. My second question is related to your EBITDA margin. Yes, it continues to improve. However, you are still are below, right, your medium-term guidance, and seems like revenues are growing a little less than you anticipated. Even though you're still maintaining the plus 10% for this year.

Is there anything you can do on the cost side if the revenues don't come through this year? Thank you.

Thiago Maffra: Thank you, Mario, for the question. We'll take the first one. We cannot talk about the net new money for the quarter. So far, but, my answer for you will be we are confident in delivering the $20 billion, or around $20 billion for the next quarters? As I mentioned before.

Victor Mansur: And hi, Mario. Taking the second part here about EBT and SG&A. First, talking about EBT. Our product and the EBT depends on the product mix as we discussed it before. And also the tax rate. And the trend in both of them should be trading around the quarter if the market keeps the way it is. And talking about SG&A, we delivered a lot of reduction in the efficiency ratio over the last two years, almost 400 basis points. And since we keep investing in strategic areas as new advisers and technology and you name it, we may see the index more flattish over this year.

It's valid to reinforce our commitment to cost control and the efficiency even though but we are not gonna stop investing in your core because of a bit more of unpredictable levels of revenue coming from their Wholesale Banking size. As Maffra said, 02/1926, there is a lot of time to the end of 02/1926. And for now, we are comfortable if the levels

Mario Pierry: Okay. That's clear, Victor. Let me rephrase the first question then. When we look at inflows during the second quarter, did you see an improving pattern throughout the quarter? On a monthly basis, are you seeing inflows improving? Or did you see them improving in the quarter? Or is it relatively you know, the same amount of inflows per month?

Thiago Maffra: Mario, I will give you the same answer that I gave before. I believe we can deliver the $20 billion. If you get the last quarter, it was $16 billion. I imagine that one customer or two could make the difference here. So $20 billion, it's the number here, and around $20 billion, could be a little bit higher or a little bit lower. Okay? But that's the pace right now.

Mario Pierry: Okay. Thank you.

Operator: Okay. Next question is from Marcelo Mizrahi, Bradesco BBI. Marcelo, you may proceed.

Marcelo Mizrahi: Hello, everyone. Thanks for the opportunity to do the question here. So my question is regarding, again, about the corporate portfolio. Which was a huge growth in a quarterly basis. And not too much in a yearly basis. But just to understand what's the what's the tribe of this credit, what's happening exactly here. And looking forward, another question is regarding the net new money of the corporates. To understand, if there are any new strategy here, is if there are any news here to justify this net new money negative on the corporate side? Thank you.

Victor Mansur: Thank you for the question. Victor here. The first part sorry, the first part about credit portfolio. As we said before, those are credit we originated to sell. So basically, those are operations we did with corporates and we originate receivables that will be securitized and then sold to our client base. That's something that we did before over the other quarters. And it's the same that we're gonna do again. So we expect to sell that. And talking about the corporate, the new money, the I think the problem here is the dynamics of the market. We are seeing we begin to see that in the first quarter and then the trend intensified a bit in the second quarter.

What we are seeing the banks that give credit to the companies, they are asking for a reciprocity in terms of investments to deliver some credit lines. Since we are not in this business and we are not able to give the main product that is credit, we are seeing the money flow to banks that usually have some products as cash flows, anticipation of cards and etcetera. So that's basically the that's basically the case.

Marcelo Mizrahi: Okay. Thank you.

Operator: Moving to the next question. Tito Labarta from Goldman. Tito, you may proceed.

Tito Labarta: Hi. Good evening. Thanks for the call. I'm taking the call. My question, just following up a little bit more on the revenue growth right? I mean, you're maintaining the 10% for this year, around 10%. Maffra, you said it should accelerate. The second half of the year. If you break that down, right, retail growing 9% year over year. 11 that's a big closer. I guess, first, do you think retail in and of itself will accelerate in the second half of the year? Or two, is it more the issuer services, the corporate and all the other lines you expect? Mean, those obviously still accelerates given the somewhat weak. First half of the year.

But just so we can break out between retail and other revenues and which lines can drive that revenue growth closer to 10%? Thank you.

Victor Mansur: Hi, Tito. This is Victor. So basically, we can break that revenue growth between the first half of the year and the second half is three factors. The first one is very easy to explain. We have 6% more business days, so more business days, we have more trading days, more interest rates over our capital and clients cash. And also a higher SILIQ rate in the second half of the year against the first. That's the first part of the explanation. The second one, is the new verticals and new advisers.

So basically, we keep hiring advisers, and we have a lot of products that are still in rollout and are growing a lot as international investments, consortium and other products in the new verticals portfolio. And the last one that is more volatile is the product mix If we have a second quarter, if a DCM that is stronger, and more primary offering from funds, we may see a lift in retail revenues and also new issues services revenues. So basically, those are the three components and why we are expecting to have higher revenues in the second half against the first.

Tito Labarta: Great. No. That's helpful, Victor. Just one quick follow-up. Maybe on the fixed income revenues, which are still strong, like 20% year over year, although it did fall a little bit in the quarter. I mean, mentioned higher rates. How do you think about are you getting to sort of like the peak level on the fixed income or can that still continue to outpace the other segments just on a relative basis? I see the fintech and other than relative to the other, just given the review on the website.

Victor Mansur: Okay, Tito. I heard the first part of the but the second was, a bit confusing here. But I will try to answer here. First, in fixed income, it's important to mention that for retail clients, we are in the highest ever Selic rate in almost twenty years. So we are in the highest level the cycle. So in the perception of the clients they never had interest rates spot interest rates that is so that's as high as now. So why is important to mention that? Because clients, they don't go longer in duration when that happens.

If this slope in the interest rate curve, So what we are seeing is an increase in volume but decreasing ROA given that duration profile. So when interest rate starts falling or the interest rate has a more normal shape, we may see the duration going higher again and the ROA increasing. But that's a bit of the dynamics of fixed income right now. And what can change that over the second half of the year? Is the DCM market and the primary offerings that may go to market if the pipeline goes as it is because of the new tax regulation. So a lot of primary options attract clients, and we may see they get longer in duration again.

So, basically, we expect the fixed income line to perform keep your performance well And depending on the primary market and the same, we may see this number a bit higher.

Tito Labarta: Thanks. That's good.

Operator: Next question is from Arnaud Shirazi from Citi.

Arnaud Shirazi: Hi, all. I have two questions here. My first one is related to non-people related expenses. We saw a 38% year on year increase. I know that it was by marketing and also technology, but it seems a little bit too much for me. And, also, the second one is related to tax. How would the tax increase is on offshore funds has been evolving? And what drove the positive income tax rate for this quarter? Thank you.

Victor Mansur: Thank you. Thank you for question. First here talking about SG&A. We had a lot of investments in marketing. We had some events that are the first time that we're doing the size that we did. We had the B2B experience is event for all our IFAs network outside of Brazil where we announced some important measures for the year. And second is the gas is agro business event here in Brazil that we sponsored and very important to us because we get closer to the clients that issue taxes and notes, corporations that are able to issue taxes and notes.

Also, investments in markets to get our reputation a bit more stronger and more visible over all brands and newspapers and etcetera. In terms of technology, it's one of events that we did in terms of cloud and other kinds of tech. And talking about the trend over the year, keep in mind the next quarter, have the or main event of the year, the expert. So also another quarter if no people expenses that are higher than comparison quarter over quarter.

Moving to tax rates, I think we talked in a few opportunities that given the dynamic of the market and the product mix, if the market making activity and secondary market a bit more stronger than investment banking and broker dealer revenues. There are tax rate should be trading around 15% and that was basically the case. Now we closed at 14 something over the last twelve months. And if the product mix keep the way it is, that's the number that we may see, over the year.

Arnaud Shirazi: Thank you. But as related to offshore tax, the potential increase, what the thoughts?

Victor Mansur: Ah, okay. Perfect. I think as any other financial institution in Brazil, there is a lot of ways to plan our tax structure and we are confident that the impact will be marginal in your business.

Arnaud Shirazi: Thank you.

Operator: Okay. Next question is from Neha Agarwala from HSBC. Neha, you may proceed.

Neha Agarwala: Thank you for taking my question. Just one again, sorry to go back to this, but the corporate net new money was significantly weak versus what you saw in the seen in the previous quarters. I understand the volatility, but anything specific this quarter that led to this big, decline compared to previous quarter? And should we expect more of that next quarter, or was this like a one-off trend with some one-off moves? And my second question is, you talked a bit about the fee-based model, and that's only 5% of your AUC, and that's been growing. Can you talk a bit more about what impact we could see from that on your take rate, if any? Thank you.

Victor Mansur: Okay. Thank you. Thank you, Neha. I will take the first one. I think the corporate dynamic is a bit there what I said. If the banks that give credit to their clients keep asking for investments in terms of reciprocity. We may suffer a bit more in the third Q and 4Q since we are not going to this business. But also, it's important to remember that the ROA of this money is extremely low. So, the impacts in revenues to losing that money, they are not relevant. But it's very hard to predict what we are gonna see over the next quarters. As you say, these are more volatile cash.

Thiago Maffra: Hi, Neha. This is Thiago. Thank you for your question. I will take the second part. When do you think about fee-based model, I believe there is evolution about, the model in Brazil. If we get the US market, for example, today, if you look in terms of AUC, it's $70.30, but in terms of revenues is more like $50.50. Okay? In Brazil, as I mentioned, it's still very small. Okay, but it's growing. As I mentioned in the presentation, today, we are prepared for to offer to our clients any kind of model, consultancy, fee-based, IFR IFA model, transactional-based model. We can serve our clients in different ways and charge in different ways, okay?

So we are agnostic, and we offer what's best for our clients. What we expect for the next years, as I mentioned at the beginning of the year, this year was to grow, I would say, from 3%, 4% to 7%, 8%. Okay? So it's growing. And but it's gonna be a long journey here. It's not going to happen like from one day to the other, but we'll grow. And again, we are the best platform to offer all the models to our clients, and we believe being agnostic to models is a real differentiation to serve our clients better. But thinking about revenues, if you look only the take rate it goes down, a little bit.

Not a lot, but it goes down. Okay? But usually, it comes with a higher share of wallet. So, usually, when we start to serve a client to a fee-based model, or to, consolidation of, funds outside of XP, usually, the AUC or the wallet or all the money that we oversee if it's not a 100% here. Because today, we offer that model. We consolidate what's outside of XP. Usually, you make more money or, I would say, equal money in terms of revenue. Because you increase the size of the wallet. Okay?

So I would say, if, in the next quarters or years, we'll start to see the take rate going a little bit down but at a very slow pace. But the share of wallet per client will increase. And compensate the lower take rate.

Neha Agarwala: Very clear. Thank you so much.

Operator: Okay. Next question is from Pedro Leduc, Itau BBA. Leduc, you may proceed.

Pedro Leduc: Okay. Good evening, everyone. Thank you so much for the call and taking the question. I would like to explore the gross margin a little bit more, expand that Q on Q when I try to look at the moving pieces here. IFA commission incentives get nicely diluted. So I was trying to dig into this trend a little bit more. What drove it? If you were related to maybe the lower pace of net new money or the mix of your revenue movements or more equities, less fixed income, Just trying to get a sense of what is driving this gross margin expansion and how to think about it in the second half. Thank you.

Victor Mansur: Hi, Leduc. Thank you for your question. I think here, first talking about some events. As we said before, the expected credit losses should be trading a bit lower than last quarter, and that trend should remain like that, around BRL9 million to BRL100 million. And the second point was a bit higher than average sales tax and that should go back to the average and not expect the number to go to be as high as that. And the margin should go as normalizing when you look in the last twelve months. Yeah. And the channel mix is also important to mention.

And as the internal sales force keep growing, but also, that's a trend that you're gonna see improving over quarters. But if you look at the last twelve months, that's the pace. That should be expecting for the rest of the year.

Pedro Leduc: Thank you.

Operator: Okay. Next question is from Daniel Vaz from Bank of Safra. Vaz, you may proceed.

Daniel Vaz: Thank you. What is it? Yep. One Enrich opportunities, you mentioned that the picture see productivity has been much stronger than the B2B. Right? So the B2C has been a large for focus recently, and you standardize probably an approach for selling for the sales team. Right? So seems more well structured right now. When it comes to the B2B I think the productivity has deteriorated. Like, over the years. So I wanna hear from you first if you're seeing net outflows from this channel from the B2B. And secondly, if you could tell us a bit your diagnostic right on the B2B channel if you need a higher focus right now to maybe refresh or review this model.

So this has been in the press recently regarding M&As on the advisory a lot of mandates. Would be good to hear from you the diagnostic. Thank you.

Thiago Maffra: Thank you for the question. As we have said in the past, for us, it's not, one channel or the other. We believe in having multiple channels for, different reasons. But when we look the B2B channel, the B2B channel specifically, as you mentioned, the productivity was, very low. It's too low when compared, like, to, two years ago, one year and a half. Or more ago. But it's getting back. It's improving, bit by bit. It's not gonna change a lot from one quarter to the other, but it's improving.

So everything that we have been done a lot of efforts and energy that we have put, on the channel since, last, the end of last year and more specifically at the beginning of this year. It's paying off, and we are starting to see the performance of B2B channel improving. So that's why we are confident on the $20 billion. Okay?

Daniel Vaz: Okay. So a follow-up. So you don't need a refresh or a review in this the way you operate in this model, right, as you did in the B2C?

Thiago Maffra: It's just, a normal, evolution. You have, like, to evolve the model. We just announced back in on the B2B experience, the big event that we do annually for the B2B channel. JZero was in Mendoza. And we announced some, changes on the way of serving clients. So I would say minimum standards of, serving our clients. So allocation, number, and ways, points of contact with the customers, And so I would say more like a franchisee model where we have, minimal standards. And we just announced that, like, two months ago. So it's an evolution. It's not like a big change.

Daniel Vaz: Okay. Thank you.

Operator: Okay. We are at the time. So the name of the company would like to thank you all for participating in our second quarter 2025 earnings call. Any further questions will be more than welcome. Just look for the IR team and we keep in touch, and see you soon. Thank you very much.

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XP(NASDAQ:XP) reported second quarter 2025 results on Aug. 18, 2025, delivering record net income of BRL1.321 billion, up 18% year over year, and a return on equity of 24.4%. Total client assets under management and administration reached BRL1.9 trillion, up 17% year over year, while gross revenues rose 4% to BRL4.7 billion, and diluted EPS increased 22% year over year. The following highlights focus on profitability drivers, capital allocation, and channel diversification shaping the long-term investment case.

XP net margin expands to record high

Net income margin reached 29.7% in the quarter, with SG&A expenses growing 10% year over year due to ongoing investments in technology and marketing. The Common Equity Tier 1 (CET1) capital ratio rose to 18.5%, well above the Brazilian sector average of 12%, providing significant capital flexibility.

"Net income reached BRL1.3 billion, an 18% increase year over year and a 7% increase quarter over quarter. Net margin expanded by approximately 130 basis points quarter over quarter and 320 basis points year over year, reaching 29.7% in 2Q 2025. In your revenue mix for this quarter, higher secondary market activity compensated lower volumes on investment banking, impacting our effective tax rate. This translated into a new record high net income for a quarter, with significant EPS growth."
-- Victor Mansur, CFO

This margin expansion, despite investment banking headwinds, demonstrates the resilience and scalability of XP’s diversified business model, supporting long-term value creation even in challenging market conditions.

XP capital allocation boosts shareholder returns

XP maintained a BRL1 billion share buyback program and committed to distributing over 50% of net income in both 2025 and 2026. Diluted EPS grew 22% year over year, outpacing net income growth due to the shrinking share base from buybacks.

"Combined, their volumes should be above 50% of net income for 2025 and 2026. We already have a share buyback program of BRL1 billion to be executed until next year, and new announcements will be made according to the Board of Directors' decision. Moving to the second part of capital management on the next slide. This is the last topic of my presentation. And we can see on the left-hand side that our BIS ratio in a very comfortable level of 20.1%. On the same rationale, our CET1 is at 18.5%, which is way higher than peers' average of 12%."
-- Victor Mansur, CFO

This disciplined capital deployment supports robust shareholder returns while preserving a strong regulatory buffer for future growth or macroeconomic uncertainty.

Channel diversification drives asset growth

XP increased active clients by 2% year over year to 4.7 million, with more than half of new asset inflows now coming from internal advisers and the Registered Investment Adviser (RIA) model, a shift from exclusive reliance on the B2B Independent Financial Adviser (IFA) channel in 2021.

"If you go back a few years, I would say that the main one was channel diversification. Back in 2021, we only had one channel, what we call the B2B, the IFA channel. Today, we have the internal advisers. We have the RIA model. So if you look the numbers today, more than half of the net new money is coming from the new channels. And we keep investing in increasing the number of internal advisers, the number of IFAs on our network. So one of the, levers here."
-- Thiago Maffra, CEO

This evolution in distribution channels enhances the durability of XP’s growth and supports its market leadership ambitions.

Looking Ahead

Management reaffirmed its target of approximately 10% full-year revenue growth for 2025 and aims for an average of BRL20 billion in retail net new money per quarter, subject to macroeconomic conditions. The company expects to complete its remaining BRL1 billion share buyback and continue distributing over 50% of net income through dividends and repurchases in 2025 and 2026. Management anticipates higher revenue acceleration in the second half of 2025 compared to the first half.

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Key Points

• Berkshire Hathaway has achieved stellar returns under Buffett's leadership and has $340 billion in cash.

• American Express has a strong brand and affluent customer base, giving it resilience across economic cycles.

• Ally Financial relies on cyclical automotive lending, and that makes it vulnerable to economic downturns.

• 10 stocks we like better than Berkshire Hathaway ›

For decades, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has captured the attention of investors with its long track record of stellar returns. Since taking over as CEO in 1965, Buffett has consistently delivered an incredible annualized return of 20%. Just imagine, a $100 investment back then would have blossomed into over $5 million today.

Buffett's keen eye for high-quality companies with competitive moats has made him a beacon of inspiration for investors everywhere. While his successful track record speaks volumes, it's important to remember that not every investment hits the mark. With that in mind, here are two Buffett stocks that I would scoop up right now, along with one that I'd steer clear of right now.

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Buy Berkshire Hathaway

The first stock I'd buy is Buffett's own Berkshire Hathaway. Investing in Berkshire provides investors with diversification, disciplined capital management, and stellar long-term returns. At its core, Berkshire is a conglomerate of high-quality businesses, including wholly owned subsidiaries like Geico, BNSF Railway, and Berkshire Hathaway Energy, as well as a massive equity portfolio featuring blue chip names like Apple, Coca-Cola, and Visa.

What has set Berkshire apart is its capital management and patience across economic cycles. Buffett and his right-hand man, the late Charlie Munger, achieved a stellar track record of investing in high-quality companies going back 60 years. The company has done so by avoiding fads and investing in durable businesses with strong moats and steady cash flows.

Earlier this year, Warren Buffett announced he was passing the reins of CEO on to Greg Abel. Meanwhile, investing lieutenants Todd Combs and Ted Weschler will help direct Berkshire's massive investment portfolio.

The company is in a good spot in terms of capital. Its huge cash pile stands at nearly $340 billion, providing it with dry powder for opportunistic purchases during market dislocations. For long-term investors, Berkshire Hathaway is a well-run conglomerate with a ton of cash on hand, leaving it well positioned even in a post-Buffett era.

Buy American Express

The second Buffett stock to buy is American Express (NYSE: AXP). American Express boasts a strong brand, customer loyalty, and strong credit metrics, making it a solid blue chip stock for long-term investors.

The company operates a closed-loop payments network, unlike Visa or Mastercard which only handle transactions. As a result, American Express captures fees from transactions on its network along with interest-earning loans on those credit card balances. Visa and Mastercard earn swipe fees, but credit card loans are held by banking partners that reap the benefits of interest payments.

While this gives American Express interest income, which can help boost earnings, especially when interest rates rise as they did a few years ago, it also opens the company up to credit risk. If its credit card borrowers fail to repay their balances, it could impact its credit quality and ultimately its earnings.

This is where American Express' strength becomes evident. The company reduces its credit risk by focusing on a high-spending, high-credit customer base that can be more resilient in economic downturns. As a result, American Express tends to have stellar credit metrics compared to its peers. On top of that, it benefits from growth in travel, luxury spending, and business expenditures as its affluent consumer base helps drive above-average transaction volumes and fee income.

For long-term investors seeking quality, resilience, and consistent shareholder returns, American Express is a compelling stock for your diversified portfolio.

Avoid Ally Financial

One Warren Buffett stock I wouldn't buy is Ally Financial (NYSE: ALLY). There is nothing wrong with the company per se, and it could do well if we get interest rate cuts from the Federal Reserve in the coming years. However, the company has some limitations that could hurt its long-term growth prospects.

First, it operates in a highly cyclical business, with over three-quarters of Ally's revenue coming from automotive lending. This reliance on auto lending makes it sensitive to economic downturns.

During recessions or credit contractions, demand could wane and delinquencies and charge-offs could spike, causing a hit to its profits. This is precisely what happened in recent years, when Ally's revenue and income dropped off amid the rising interest rate environment of 2022 to 2023.

Additionally, Ally competes in crowded markets, such as automotive lending, digital banking, and investing. It faces competition from banks, like JPMorgan Chase, Bank of America, and Capital One Financial, along with fintech companies like SoFi. It also faces competition in automotive lending from PNC Financial and Upstart, which is gaining a foothold in the space.

Ally could do well in the near term, especially if credit conditions normalize and the Federal Reserve cuts its benchmark interest rate. While the stock is reasonably priced on a forward basis, I don't see a strong, robust business model with a strong moat, which is why I would avoid this Buffett stock today.

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Ally is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in American Express, Apple, Berkshire Hathaway, JPMorgan Chase, and SoFi Technologies. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, JPMorgan Chase, Mastercard, Upstart, and Visa. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.

Key Points

• Warren Buffett has authorized $77.8 billion worth of stock buybacks since 2018, double the amount he has ever invested in any other stock.

• While Berkshire's buyback program remains active, Buffett hasn't pulled the trigger in any of the past four quarters.

• A combination of Berkshire's current valuation and pending leadership change could be among the reasons Buffett is sitting on his hands.

• 10 stocks we like better than Berkshire Hathaway ›

Warren Buffett has been the chief executive officer of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) since 1965. He oversees a variety of wholly owned subsidiaries like Dairy Queen, Duracell, and GEICO Insurance, in addition to a $293 billion portfolio of publicly traded stocks and securities.

Berkshire is also sitting on $344 billion in cash. Buffett and his team would normally deploy this money into new opportunities when they come up, or return some of it to shareholders through stock buybacks.

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He authorized $77.8 billion worth of buybacks between 2018 and mid-2024, which is more than double what he has ever invested in any other stock.

However, he hasn't authorized any buybacks for the past four consecutive quarters, which might be concerning for investors who follow the Oracle of Omaha's every move. Does he think a stock market crash is on the way, or is he no longer bullish on Berkshire's prospects? Below, I'll highlight two plausible reasons for the pause.

Warren Buffett turned Berkshire into a cash-generating machine

Before diving into the two possible reasons for Buffett's recent inaction on buybacks, let's examine why Berkshire is sitting on so much cash.

First, the conglomerate has been a net seller of stocks for 11 straight quarters on the back of historically expensive valuations, which has freed up a mountain of cash. It even sold more than half of its stake in Apple last year; after investing about $38 billion in the iPhone maker between 2016 and 2023, the position was worth more than $170 billion in early 2024, so it was probably wise to cash in some of those gains.

Second, Berkshire is a cash-generating machine. It owns numerous insurance, utilities, and logistics companies that deliver steady income and earns a truckload of dividends each year from its stock portfolio. The conglomerate is on track to receive $2.1 billion in dividends during 2025 from just three stocks alone: American Express, Chevron, and Coca-Cola.

With so much money coming in, why is Buffett hesitating to repurchase Berkshire stock?

The first possible reason: Berkshire's valuation

Buybacks reduce the number of shares in circulation, which organically increases the price per share by a proportionate amount and gives each shareholder a larger stake in the company. In other words, they are great for investors.

Berkshire stock has generated a compound annual return of 19.9% since Buffett took the helm, crushing the average annual gain of 10.4% in the benchmark S&P 500 index during the same period. Therefore, chances are Berkshire will outperform almost any other stock Buffett could invest in, which minimizes the opportunity cost of performing buybacks.

However, Buffett has a keen eye for value and he never wants to overpay for a stock -- not even his own. Berkshire is currently trading at a price-to-sales ratio (P/S) of 2.5, which is a huge 25% premium to its 10-year average of 2.

BRK.A PS Ratio data by YCharts.

Berkshire stock last traded in line with its average P/S in early 2024. Interestingly, the buybacks stopped after the second quarter of that year, which could be a sign Buffett thinks the stock is simply too expensive at these levels.

The second possible reason: Succession

Berkshire can repurchase its own stock at management's discretion as long as the balance of its cash and equivalents is more than $30 billion. Since it is sitting on $344 billion in dry powder right now, that certainly isn't an issue.

However, at Berkshire's annual shareholder meeting on May 3, Buffett announced he will step down from his role as CEO at the end of 2025. He will continue to serve as chairman so his brand of long-term value investing will probably endure, but he will hand the majority of his day-to-day responsibilities over to his chosen successor, Greg Abel.

Buffett is leaving Berkshire in an incredibly strong position, so it's possible he wants to avoid making any major decisions in his remaining time as CEO, especially those that would deplete the company's cash balance. He likely wants to leave Abel with plenty of resources to carry the conglomerate into the future, because it will give him the best chance to succeed.

After all, maybe buybacks won't be on Abel's agenda at all. He might prefer to use Berkshire's $344 billion cash pile to make a series of bold acquisitions, or expand the conglomerate's stock portfolio. It's difficult to know what the future holds, but the impending leadership change is certainly a plausible reason for Berkshire's buyback hiatus during the past four quarters.

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American Express is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.

Key Points

• Credit card middleman American Express has earned its way to Berkshire's No. 2 spot for all the right reasons.

• While the oil and gas industry may be running on borrowed time, it's borrowed a lot of time, during which there's lot of money to be made.

• The recent purchase of a stake in Pool Corp. seems unusual on the surface. But a closer look reveals the Buffett-like thinking behind the trade.

• 10 stocks we like better than Occidental Petroleum ›

Veteran investors know the market is forever changing, requiring you to change with it. These changes include industry leadership, stock-selection strategies, allocation adjustments, and more.

There are still some reliable constants though. One of them is Warren Buffett, and the picks he makes -- or at least approves -- for Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) portfolio. If a stock becomes a Berkshire holding, you can bet it's a quality name with a promising future.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Here's a closer look at three Warren Buffett picks currently held by Berkshire Hathaway that just might work for your portfolio as well.

1. American Express

Buffett's done a fair amount of selling over the past few quarters, lightening up on Berkshire's positions in Apple, Bank of America, and DaVita, and outright exiting its stakes in Citigroup and Nu Holdings.

One stock has remained conspicuously untouched for years now, however, to quietly become Berkshire Hathaway's second-biggest holding (right behind Apple). That's credit card outfit American Express (NYSE: AXP).

It's not too difficult to see why Buffett's such a fan, though; the company's certainly more than proven it knows how to make its unique business model work.

On the surface it's just another credit card company. Under the hood though, it's more. Unlike Visa and Mastercard, which are only payment networks for card issuers, American Express is both the issuer and the payment middleman.

This leveraged position allows it to offer a perks and rewards program that cardholders are willing to pay up to $700 per year just to access. This annual fee also means American Express' cardholders tend to be a bit more affluent than the average consumer, and as such are less likely to miss payments, and more likely to continue spending even when other people are tightening their purse strings.

And the proof is in the company's results. With the obvious exception of 2020 when the COVID-19 pandemic was in full swing, Amex's top line has improved every year going all the way back to 2017.

Profit growth hasn't been quite as consistent. It's remained reliable enough, however, to make American Express a solid dividend stock. Although the company tends to not raise its dividend payments in times of uncertainty -- like in the wake of 2008's subprime mortgage meltdown or during the COVID-19 pandemic -- it still continues to pay a quarterly dividend, and begins raising these payments again as soon as the economy makes it feasible to do so.

2. Occidental Petroleum

If it seems like the oil and gas business is inching its way to obsolescence, that's because it is. With the advent of electric cars and renewable energy sources, consumers just won't need oil like they have in the past. To this end, Goldman Sachs predicts "peak oil" -- the point at which the planet's daily consumption of crude stops growing and starts shrinking -- will happen in 2035.

There's a reason, however, that Buffett remains enough of a fan of oil giant Occidental Petroleum (NYSE: OXY) to stick with Berkshire's 265 million share position despite the stock's relatively poor performance of late. That is, there's still a great deal of money to be made in the business between now and then, and even after 2035.

See, while demand will likely start to shrink then, it's apt to shrink very, very slowly. Indeed, outlooks from ExxonMobil, OPEC, and Standard & Poor's all suggest that oil will still be the world's top source of energy production as far down the road as 2050. The continued proliferation of alternative energy options just won't be able to keep up with the ever-growing demand for electricity.

And Buffett feels very good about Occidental's ability to deliver, even in an environment where crude oil prices remain subdued. As he noted in 2023's letter (published in early 2024) to Berkshire Hathaway shareholders:

"Under Vicki Hollub's leadership, Occidental is doing the right things for both its country and its owners. No one knows what oil prices will do over the next month, year, or decade. But Vicki does know how to separate oil from rock, and that's an uncommon talent, valuable to her shareholders and to her country."

That's strong personal praise from the Oracle of Omaha.

The kicker: Buffett also touted the potential of the carbon-capture technology that Occidental Petroleum is developing, which literally sucks carbon dioxide out of the ambient air. While it's not quite yet ready for mass commercialization, that day is coming, and soon, putting Occidental into what's apt to be another multibillion-dollar market.

3. Pool Corp.

Finally, add Pool Corp. (NASDAQ: POOL) to your list of Warren Buffett stocks you might want to buy for yourself right now.

It's the smallest and least-known of the three companies in focus here, with a market cap of only $11 billion. It's not a particularly big Berkshire holding either; the conglomerate's 1.5 million Pool Corp. shares are worth less than $500 million, which is less than 4% of Pool itself.

This relatively small stake makes Buffett's interest in the company all the more telling. While owning this much Pool stock doesn't actually do much for Berkshire's bottom line, Buffett and/or his lieutenants waded in anyway. There's a reason, even if it's not yet clear.

But first things first. Yes, this is the company that sells swimming pool supplies. It's the biggest name in the business, in fact, doing $5.3 billion worth of business last year. Of that, $617 million was turned into net income.

Curiously, both of those numbers were down from 2023's comparisons. Neither figure is expected to improve any this year, either. Berkshire bought the stock anyway despite its relatively rich valuation of 28 times this year's expected per-share profit of $10.88. It's a significant vote of confidence in this company's future growth prospects.

The thing is, it may not be a crazy bet at all.

There's no denying this stock's been a poor performer since 2021's peak, largely due to headwinds on the residential real estate front, where costs have soared. Investors are just worried, and understandably so.

As Buffett says though, "Be fearful when others are greedy and greedy when others are fearful." This business may be struggling right now, but it will eventually thrive again once the economy gets back up to full speed and the highly cyclical homebuying and home-improvement markets perk up, in turn driving demand for pools, and, subsequently, demand for pool maintenance supplies. Berkshire's just positioning in a quality company now for whenever that recovery materializes.

Should you invest $1,000 in Occidental Petroleum right now?

Before you buy stock in Occidental Petroleum, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Occidental Petroleum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,108,033!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 181% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 4, 2025

American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Goldman Sachs Group, Mastercard, and Visa. The Motley Fool recommends Nu Holdings and Occidental Petroleum. The Motley Fool has a disclosure policy.

Key Points

• As this is Berkshire’s second-biggest position, Buffett has certainly found some traits he appreciates.

• This premium credit card brand boasts superb charge-off rates that are the envy of the industry.

• Shares of American Express have performed exceptionally well in recent years, creating valuation risk.

• 10 stocks we like better than American Express ›

There are dozens of companies in Berkshire Hathaway's public equities portfolio. A lot of attention might go to Apple or Coca-Cola. However, investors need to pay attention to another business that's at the top of the list.

Warren Buffett-led conglomerate Berkshire Hathaway owns 21.6% of the outstanding shares of this well-known financial services company. This stock has climbed a phenomenal 217% just in the past five years (as of July 23).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

But is it a no-brainer buying opportunity today?

Holding a strong position in the credit card industry

The company that Berkshire has such a huge stake in is American Express (NYSE: AXP). The top Buffett stock's underlying business certainly possesses some very favorable characteristics.

For starters, Amex has a wide economic moat. This is something the Oracle of Omaha appreciates. It indicates a company's ability to defend itself against competitive forces, supporting its durability.

The American Express brand is a key asset for the business. Some of the company's credit cards are at the premium end of the market, holding a special status among consumers. Offering impressive rewards and perks while charging hefty annual fees attracts people with higher incomes.

American Express also benefits from a powerful network effect, which is true for other card and payment platforms. As the number of merchant acceptance locations grows, so does the utility for cardholders. And with more cardholders, merchants find more value because there are more opportunities to generate sales.

Another favorable trait is just how steady American Express' financial performance is. The economic backdrop recently hasn't been the smoothest, with concerns about tariffs making investors and executives jittery. But Amex continues to shine. During the second quarter, the financial giant reported a 9% year-over-year increase in revenue. This was driven by a 7% bump in spending.

For all the talk about macroeconomic weakness leading to a possible recession, Amex is giving investors every reason to remain optimistic. The percentage of card members loans that are 30 days or more past due is significantly below the industry average. Net write-off rates also declined sequentially and compared to the second quarter of 2024.

The company is extremely profitable, something Buffett likes. American Express generated $2.9 billion in net income in the second quarter. The leadership team uses the excess cash to buy back shares and pay a dividend. These are certainly investor-friendly capital allocation practices.

Why investors should tread with caution

Shares of Amex have been a huge market outperformer in recent years. As a result of this strong performance, the stock isn't cheap. The market is asking investors to pay a price-to-earnings (P/E) ratio of 21.5 to buy the stock. That's definitely not a bargain, as it's well above the trailing-three-year average multiple. But it's also not egregiously expensive.

Investors who want to own high-quality companies for a long time should undoubtedly have American Express at least on their watch list. The business should continue to post solid revenue and earnings growth for the foreseeable future, while the brand presence and network effect help it maintain its competitive standing. These are wonderful qualities to focus on.

But it's really anyone's guess what valuation multiple the stock will trade at five or 10 years down the road. This is a critical factor to think about. If the P/E ratio expands, it can add tremendous upside. On the other hand, paying too high of a multiple up front can create a headwind, as the P/E ratio could contract over time.

At the current price, American Express is far from being a no-brainer stock to buy.

Should you invest $1,000 in American Express right now?

Before you buy stock in American Express, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

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 and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Key Points

• Amazon’s flexibility is the source of its competitive edge, and the reason it can continue growing indefinitely.

• Uber Technologies is plugged into a major societal shift that could fuel big growth well into the distant future.

• American Express’ business is more -- and more resilient -- than it seems on the surface.

• 10 stocks we like better than Amazon ›

Is your retirement nest egg where it needs to be right now? That is to say, is it big enough at this stage of your life to ensure it will be big enough then?

Most Americans don't think theirs is. Although most people are saving something, as data from The Motley Fool's in-house research arm highlights, only 34% of Americans feel like they're actually on track for the comfortable retirement they're envisioning for themselves. The other 66% fear their golden years are going to be underfunded.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

If you're one of the 66%, although you can't go back in time and change the past, you can change your current growth trajectory by owning more of the right growth stocks. Here's a closer look at three such names that could beef up the returns on your retirement savings.

Amazon

Yes, Amazon (NASDAQ: AMZN) is a frequently recommended trade. It's almost a cliché, in fact. The stock's also one of the market's most reliable long-term performers, with a future that's just as bright as its brilliant past.

Amazon is not only one of the stock market's biggest companies in terms of market cap, it is the top name in North American e-commerce. Numbers from Digital Commerce 360 indicate that Amazon consistently controls roughly 40% of the continent's ever-growing online shopping industry. While its overseas reach isn't nearly as wide, its international arm is now at least reliably operationally profitable as well, thanks to several years of steady growth.

Yet, e-commerce isn't Amazon's breadwinning business. Although it only accounts for about 16% of its total top line, its cloud computing arm, Amazon Web Services, produces on the order of 60% of the company's total earnings. The growth of both types of business has produced consistent double-digit sales growth for years, which is expected to remain firm for least several more.

Amazon's peer-beating growth rate could actually last indefinitely for one overarching reason. That's Amazon's ability and willingness to adapt -- or even enter new lines of business -- as merited.

Think about it. This company hasn't always been in the cloud computing business. That arm wasn't launched until 2006. Amazon Prime didn't exist until 2005. Even its most basic e-commerce operation has evolved since its infancy. While the website still looks about the same as it did years ago, it's now being monetized as an advertising medium more so than an e-commerce platform. Amazon collected more than $56 billion worth of high-margin ad revenue from its sellers last year, in exchange for featuring their goods. For perspective, that's more operating profit than its domestic and international e-commerce arms produced on a combined basis.

There's every reason to believe Amazon can and will remain a growth monster well into the distant future.

Uber Technologies

Ride-hailing outfit Uber Technologies (NYSE: UBER) isn't just catching on with consumers. It's tapped into a massive sociocultural shift. That's the fading interest in car ownership in favor of using alternative forms of personal mobility (like ride-hailing).

Data from the Federal Highway Administration puts things in perspective, highlighting how the number of licensed U.S. drivers between the ages of 16 and 19 has fallen from 65% as of 1995 to only about one-third now. That's just part of a much bigger paradigm. More and more people are never getting their license at any age.

Then again, why would they become licensed drivers if they're less and less likely to own a car to drive?

While older drivers remain relatively interested in ownership of a vehicle, data from a recent survey performed by Deloitte indicates that 44% of Americans between the ages of 18 and 34 would be willing to not own their own car. This disinterest is growing as time marches on, pointing not just to changing preferences, but a major societal shift as to what constitutes "normal" mobility options.

Uber Technologies' results have long reflected its role in this shift. Revenue growth in the mid-teens is the norm now, and likely to remain the norm for a long while as individual car ownership continues to decline. An outlook from Straits Research suggests that the worldwide ride-hailing and taxi market is poised to grow at an average annualized pace of more than 11% through 2033, although this pace of progress could last far longer than that.

UBER Revenue (Quarterly) data by YCharts.

The kicker: People are quickly falling in love with the idea of same-day delivery of online purchases too, which Uber now also offers. On a constant-currency basis, Uber's delivery revenue grew 22% to nearly $3.8 billion in the first quarter of this year, and now accounts for a little over 30% of the company's total top line.

American Express

Finally, add American Express (NYSE: AXP) to your list of stocks you can -- and arguably should -- buy and hold for decades in your retirement account.

Ostensibly it's a credit card outfit, in the same vein as Visa and Mastercard. There are certainly plenty of similarities between the three companies. There are also a couple of critical distinguishing factors, however.

Whereas Visa and Mastercard only manage payment networks and charge a modest fee for each purchase they facilitate, American Express manages its own payment network in addition to being the credit card issuer itself. This is no trivial detail, either. This much control of the purchase and payment process means serious operational savings.

Perhaps the more important factor at work here, however, is the fact that American Express isn't as much of a credit card middleman as it is an operator of a perks and rewards program that just so happens to be built around credit cards. Some people are willing to pay up to $695 per year just to be able to access private airport lounges, enjoy discounted hotel stays, and receive credit toward entertainment purchases and ride-hailing services (and more).

This makes American Express cards particularly appealing to a more affluent crowd that's less likely to curtail their spending or fail to make payments when economic headwinds constrict personal budgets. That's a nuance that the company's management wasn't shy about highlighting following April's release of its first-quarter results.

You'll probably never see double-digit growth from American Express. You certainly haven't in the recent or not-so-recent past! You will, however, see persistent revenue and profit growth supporting consistent dividend growth and stock buybacks, which quietly add value in their own often-overlooked way. That's how an investment in this stock has easily beaten the performance of the S&P 500 over the course of the past 30 years, when reinvesting the dividends it's paid since then.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Mastercard, Uber Technologies, and Visa. The Motley Fool has a disclosure policy.

In this podcast, Motley Fool analyst Matt Argersinger and host Ricky Mulvey discuss:

• What home sales data says about the economy.
• A traffic slowdown at Chipotle, and the restaurant chain's strong unit economics.
• The reasons why Warren Buffett could be sitting on a record amount of cash.

Then, Motley Fool host Mary Long and analyst Asit Sharma continue their conversation about AMD, and discuss the impact of tariffs and export controls on the chip designer.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

This video was recorded on April 24, 2025

Ricky Mulvey: Berkshire Hathaway is sitting on more cash than any company in history. You're listening. It's Motley Fool Money. I'm Ricky Mulvey joined today by Matt Argersinger. Matt, thanks for being here.

Matt Argersinger: Hey. Great to be here, Ricky.

Ricky Mulvey: Good to have you on a day where we're getting some home sales data. As I was looking through the headlines this morning, I got three headlines that, all of which seem to be telling different stories. From CNBC. Home sales last month dropped to their slowest march pace since 2009. From Bloomberg, US new home sales top all estimates on surge in the South. From the Wall Street Journal, home sales in March fell about six percent biggest drop since 2022. Which one are you buying here?

Matt Argersinger: I'm going to buy the CNBC headline only because I love data points that go back way long in time. The fact that we're at the slowest sales pace since 2009, I mean, remember from a moment where we were in 2009. That's right. In the midst of a global financial crisis caused in part by a housing crash. If you're telling me that we're at the slowest pace of home sales since that period of time, that's going to get my attention. I'm definitely buying the CNBC version of this story.

Ricky Mulvey: Also pointing out that it's the March 1. We're only doing every March from this year. There's a little bit of trickiness within the way they're positioning this. I want to dig into this Wall Street Journal commentary though, which is that so far this spring supply is increasing faster than demand. The inventory of homes for sale is rising because some sellers who have been waiting for mortgage rates to fall have decided that they can't keep waiting. This is a big difference. I'm thinking about during the pandemic, being in a neighborhood in Cincinnati while I'm watching streams of people trying to look at one existing home and offers are getting taken off the marketplace instantly. This is one data point, Matt, but is this an inflecting point? Is this one data point? What are you seeing here?

Matt Argersinger: No, I hate to say that. But I think it's one data point. Yes, inventories were up 20% year over year. Probably a good sign. But remember, this data largely reflects contracts that were signed in January and February before we had all these tariff developments. People thin were probably a lot more certain and less worried about the economy than they are today. I think sadly, the data could actually inflect downward Ricky, because you have to remember the situation we're in. We still have millions of homeowners. We're locked into long term fixed mortgage rates under 5%, under 4%, in many cases, under 3%. If mortgage rates are still above 6.5% right now, which they are, I still think the vast majority of sellers are willing to wait longer, especially now if they feel even more uncertain about the economy. I feel like, yes, we've got this rise in inventory data for March, but I don't think it's Dick's. I think we're probably still in a situation where less inventories come to the market and sellers are still in this frozen mode.

Ricky Mulvey: Maybe two very different markets for existing homes and also new homes. On this coming Monday's show, I'm going to dive into some specific Home Builders with Anthony Shavon. But for now, there's a pretty odd disconnect going on with this where the data for March is showing that purchases of new single-family homes rose 7.4%. You mentioned home sellers being hesitant to leave. Home construction is still happening. You look at a company like D. R. Horton. This is the country's largest home builder and they recently reported they're telling a very different story. In their latest earnings call, sales dipped, the company's lowering sales guidance. There's a lot of questions for these Home Builders, specifically around tariffs as you mentioned. Also, worth mentioning, a lot of the people that are involved in new home construction Matt, are immigrants and that's going to be a challenge for these Home Builders. On the one side of this specific data point, you see a macro trend way more purchases of new single family homes and yet the country's largest home builder is saying, we're selling fewer homes and we expect that trend to continue. Makes sense of that. What's going on?

Matt Argersinger: It does feel paradoxical, in a way. But you have to remember, the new home sale side of the housing market pie so to speak, is very small. But it's important and I think the fact that Home Builders for the most part, have kept building throughout this whole period and have kept selling homes is important. But when I see the new home sales data, what I think it tells me is more about the demand side of the equation, which we know to be strong. We've got the biggest generation of first time home buyers in history. Ricky, I think that's you. But millennials who are desperately in a lot of cases trying to buy homes and they just can't because there's really no inventory despite the small rise that we saw in March. I think that generation, by the way, like previous generations is largely unfazed by mortgage rates. I think they understand the situation they're in. They just want a home. They're getting a job, they're moving to someplace. They'd love to be able to buy a home and not rent a home.

But I think on the Home Builder side, so to take D. R. Horton side, you're pushing discounts to move inventory right now. You know mortgage rates are expensive, financing is hard to get. To get deals done, you have to do discounts which hurts your sales. At the same time, you mentioned you got higher labor costs, you've got higher input costs. You now have a lot of uncertainty about the economy and what these tariffs are going to do to your business. You're putting less shovels into the ground. You're probably pushing off new development, holding that land a little bit longer than you want to. I wouldn't say this number is a blip. I think it's important that new home sales are up for the month, but I don't think it's telling the whole story about the demand and supply problem that we still have and I tend to buy what D. R. Horton is saying. New home sales are probably going to be heading in the wrong direction for the time being.

Ricky Mulvey: I'm out in Denver and the rental market still significantly different than buying a home out here right now. I'll be staying in the rental market for maybe a year or two, Matt. Let's move on to Chipotle Earnings. They reported yesterday after the bell. Matt, the big story is the comp sales decline, comparable sales for Chipotle dropping about half a percent. This is the first drop since COVID and also coming off a heater, a five ish percent rise from last quarter. CEO Scott Boatwright, very quick to mention that this could be a weather problem and a macro problem, you never love seeing a CEO immediately going after the weather in the first few sentences of a call. But that's what they're going for. Are you agreeing with what they're selling here?

Matt Argersinger: I will buy the macro story there, Ricky. I don't know about the weather angle. I don't know about you. I still buy burritos, even if it's rainy or cold out. But yeah, the macro story is something. If you look at what Chipotle did last year, mid to high single digit comps every quarter, they did over 7% in comps for all 2024. The negative comp this quarter was definitely a shocker, especially because Chipotle had been really holding its own. I mean, if you look at other restaurant brands, including Starbucks, which I think serves a similar demographic, I mean, they were already seeing coms fall off the table by last summer, where Chipotle really held its own. But I think it's this slowly leaking economy that we're seeing. It's lower consumer spending, it's lower consumer confidence and I think that's finally catching up even with the Chipotles of the world. Look, I think it's actually going to get a little worse going forward. I think management said they expect things to improve by the second half. They expect comps to be positive overall for the year. But you have to remember what they did last year.

Look at COMMS Q2 of last year up 11.2%. That just shows you how tough the comparisons are going to get this year. Especially now that there's this elevated level of uncertainty among its customers which they said bled into April. I expect July's results when we get them will be pretty challenging. I think if you're a Chipotle shareholder, you certainly have to anticipate that growth this year is going to be a lot slower than it was last year. A lot of the growth is really just going to come on the revenue side, is just going to come from new store openings. It's not going to really come from the comp side. If you look at Chipotle's stock price, yes, it's down roughly 30% from its all time high. That's a big drop. I'm a shareholder. That hasn't felt good, but it still trades at a very rich valuation. This year's results certainly aren't going to support that any longer. Hopefully, this is a situation where 2026 is the year when things really turn around.

Ricky Mulvey: I want to start seeing management credit the weather when things are going well for them. Weather is only a problem. It's only a headwind. You never hear a CEO saying, who's really nice out this spring and we saw more people coming in. Yes. Few other parts of the business results and I think it is worth mentioning why this stock trades at such a rich premium is that even with this decline in comparable sales, these are incredibly profitable businesses. Later in the call, they're mentioning that the year two cash on cash returns for a new restaurant. A restaurant that's been open a little bit is 60%, for older restaurants, it's 80%. You follow the commercial real estate market. I mean, that is blowing the socks off any office building, retail establishment. These are still incredibly strong businesses. Sales still growing six percent to about three billion dollars and they're still opening new restaurants, 57 new restaurants open in the quarter. What else in the business results stood out to you?

Matt Argersinger: No, I mean, that was certainly it. Those returns cash on cash returns for store openings, it's incredible. That's why I believe the story when management says we can ultimately have 7,000 stores. I mean, of course, you're going to open that many stores if they can be this profitable. Yeah, having them observed real estate, other retail businesses, I mean, they're hoping for cash on cash returns in the high single digits, maybe low double digits so they can get it. Sixty percent in year two, that's extraordinary.

Ricky Mulvey: There's a Wall Street Journal column earlier this month that had the unfortunate title of your new lunch habit is hurting the economy. There's a few key points here that I think relate to Chipotle. One of which is that the number of lunches bought outside the home were lower in 2024 than in 2020, in the height of the pandemic. Also going out to lunch right now is just stupid expensive. Hybrid office workers spending about $21 on lunch in 2024. That was up from 16 bucks in 2023. That research coming from a video conferencing company called Owl Labs. Shout out to them for finding out the cost of lunch. I still think there's a version where Chipotle wins in this environment, where people are tightening their spending, but I still want to go out to eat. If I go to Chipotle, I can get a steak bowl for about $11.50. I'm not getting the 20% tip screen. There's some headwinds here, but this is still really affordable compared to a lot of their competitors, Matt.

Matt Argersinger: It is. I mean, I think of Chipotle as high quality food at a reasonable price. I think that works no matter what happens to the economy. But I have to say Ricky, lunch is stupid expensive. If I could share one anecdote, I just recently helped my wife and son move up to New York City. They're spending the spring and summer there and we rented an apartment, and I was helping the move in. Of course, when you're moving in, people get hungry, you don't have any food, you haven't been in the grocery store. I made the mistake of ordering from Uber Eats, three sandwiches from a local deli, $55 for the sandwiches. Uber Eats fees plus tip, I was close to 80 bucks for lunch for three people.

Ricky Mulvey: What are you putting in the sandwiches?

Matt Argersinger: I mean, they were good sandwiches. One was a meatball, one was a turkey. I think the other one was roast beef. I mean, they were good, $80 good? I'm not so sure.

Ricky Mulvey: Yeah, we're seeing a similar thing in Denver and what I've noticed is sometimes the mains are still all right but now it's like a bag of chips. It's three bucks and then we're adding on more of the toast tipping environment. It makes it very unaffordable very quickly. Let's move on to this Berkshire story. Lot of Wall Street Journal today. I promise I read other news outlets. This is a column from Spencer Jacob, which I thought was good. It was actually sent to us from a listener named Chris pointing out that the annual Berkshire meeting is coming in less than two weeks. There's a question for shareholders, which is what is Uncle Warren going to do with all that cash? Right now, Berkshire Hathaway is sitting on more cash than any company ever in history including Berkshire Hathaway. It's about $318 billion. This is how he got there. He's collecting a lot of the cash dividends that the businesses send him. Also, he sold about $80 billion worth of Apple stock back in 2024. To be clear, Berkshire still has about $174 billion worth of Apple stock, so not a complete sale, but trimming some of the winners. I think the first thing people may be wondering, is this a macro signal? Is Warren Buffett battening down the hatches to buy up a bunch of stuff if the market turns south? Are you taking this cash pile as a macro signal?

Matt Argersinger: I've tried to reason my way through this a few different ways. Warren is 94-years-old. Is this just him being very conservative with the time he has left? No. First of all, he's always invested with a long term mindset. He did that through his 70s, 80s when most of us would be at that point in our lives, 100% in bonds or treasuries. He was still taking risks with equities so I don't think that's the answer. I think he's probably investing like he's going to live on 20 years. But relatedly, could it be succession planning? After all, we've known since about 2021 that Greg Abel is going to be taking Buffett's place. Is he just setting up Abel with a lot of cash, a clean slate when it comes to allocating Burch's capital? No, I don't think that could be the answer either. I think if Buffett saw a compelling investment or acquisition opportunity, he'd make it probably regardless of what Abel or anyone thinks. He's certainly proven that over time. Is it because he's lost faith in the direction of the country and therefore the US economy and maybe therefore US corporate profits?

No. I mean, Buffett is the ultimate optimist. We know this when it comes to the future of the US and that's regardless of who may currently be in the White House. I can't help but conclude Ricky, that I think this is actually macro sickling. I mean, forget the investments for a moment. Berkshire the corporation has 200 billion in net cash. Take all the cash, take out all the debt, and it still has over 200 billion. That's up from 35 billion a year ago. If you go back a little over two years ago, they actually had net debt of about seven billion. In a little over two years, they've gone from a net debt position to over 200 billion in net cash. I do think Buffett is making a market call here. You remember, one of his favorite market valuation tools is the market cap GDP ratio. It's often called the Buffett indicator for good reason, but it's the total market capitalization of a country stock, US, relative to its gross domestic product. He said in the past, when that ratio is above 100%, the market is overvalued when it's below 100%, that might suggest undervaluation. Depending on what source you use and how you calculate the US total market cap of stocks here, that ratio was over 200% coming into the year. That was at or near a record high. It's actually higher than it was in the peak of the dot-com boom. I'm finally here. I think the evidence is undeniable that Buffett thinks or thought that valuations were expensive, and he was preparing Berkshire Hathaway for just that.

Ricky Mulvey: It's not that he can only shoot with what is it? He can only shoot with an elephant gun. When you have that much cash, your only option is to take companies private or you're looking at Coca Cola or American Express, you don't think it's that.

Matt Argersinger: No. I would say it's him being patient. I think he does see a lot of clouds on the horizon. I think there's probably storms ahead, not just for US stocks, but I think for the US economy. I think Buffett believes that. You mentioned the elephant gun. He wants to make 50, 60, $70 billion blasts with first year's capital. The only way he's going to be able to do that if there are big dislocations in the market. I do think he thinks or expects there might be in the near future and that's why he's going.

Ricky Mulvey: We'll keep watching. We'll see what happens. The annual Berkshire meeting less than two weeks. Matt Argersinger, thanks for being here. Appreciate your time and insight.

Matt Argersinger: Thanks, Ricky.

Ricky Mulvey: Up next, Mary Long and Asit Sharma continue their conversation about AMD and how macroeconomic forces are impacting the chipmaker.

Mary Long: Asit a big ongoing news story that's a subsection of the tariff story has been how changing export rules have affected semiconductor stocks, in particular, how they've affected Nvidia and AMD. Last week, US government changed its export rules for certain chips last week, particularly those that are going to China. This was a big news for Nvidia which warned of a $5.5 billion write off as a result of that rule change. AMD was hit by those changes too. We on the show have already talked about the impact of that $5.5 billion write off on Nvidia. But while I have you I want to focus on what that might mean for AMD. This company is racing for closer to an $800 million impact as a result of these rule changes. Help us understand this a bit better. These rule changes impact AMD's MI308 chip. Numbers, letters, you and I talk a lot about names. What does that chip actually do? How is it different from AMD's other chip offerings? It's MI400 offerings, for example.

Asit Sharma: Yeah, so the MI308 chips are, as you suggest, basically pared down versions of AMD's latest GPU series accelerators that go in data centers. They're purpose made for this market and the interesting thing Mary, is that 2025 was supposed to be the launch year for these. They have been in prototype and the R&D phase so we didn't see a lot of sales to China in GPUs from AMD last year. This was going to be the beginning of a pretty nice opportunity. If we can translate that $800 million that the company has signaled, it's going to take us right down on inventory and work in process and translate that to revenue, probably it means about 1-$2 billion in revenue each year. Now, as a function of $31 billion in estimated revenue for 2025. That's not a huge chunk. Let's say it's going to land somewhere between four and 6% of total revenue this year. But it's really about the Ford opportunity. What the US is doing, in essence and this is not just on the Trump administration. It started with the Biden administration, but the US is increasingly putting up barriers for its greatest companies that develop AI technology like Nvidia, like AMD, making it harder for them to play in what, in essence, is the world's fastest growing market or market of most demand for these chips. The companies have been working around export controls for some time. They already understand they can't sell their most capable accelerators into China. But here we have a situation where, look even the pare down versions aren't going to be able to gain the required export licenses and hence, AMD and Nvidia are getting shut out of a market even on the lower end.

Mary Long: Where exactly in the production process were these MI308 chips? Were they designed but not yet built? Were they built, and there's already orders for them? Is there a stockpile of these designed manufactured chips that AMD thought it was going to be able to deliver to China that now is just going to sit there, or they're going to have to find another market for or is this more theoretical revenue that they were planning on that they have to find another way to generate?

Asit Sharma: Well, I think your question beautifully illustrates what we read in the very brief description, the 8K filing that AMD released, which is to say they're hinting that it's inventory, it's prototypes, it's some capitalized R&D, and it's some product that was ready to change hands. It's really a mix of everything, but we do know from that press release that some of it was inventory. This was stuff that was already developed, probably waiting to be shipped. Total cost of all of this including some of the prototyping and investment is about 800 million. Not a huge hit for AMD when all is said and done. But really, again, to come back to this point that it is taking some future opportunity off the books.

Mary Long: How much does that subtraction of future opportunity change or impact your overarching thesis for AMD? Do you view this as materially impactful to the company? Upon hearing this news, the stock market reacted like, hey, this is a big deal to both what it meant for Nvidia and AMD. How does Asit Sharma react to that news?

Asit Sharma: Yeah, same way as the market, Mary. You rerate the multiple on the company to adjust for that lost opportunity. But again, you mentioned the company has good business in China. Last year, it was about 25% of revenue that AMD derived from China, 6.23 billion. But most of this was in server chips, chips that found their way into desktop computers, gaming computers. There is a whole ecosystem of chips that are below the radar of US regulators that AMD is selling in China, those really aren't going to be impacted. The impact on my thesis isn't material. I have the same view of this as I have of Nvidia is that the demand for generative AI technology and the ability to just serve up inference and also train new models is going to be huge for a long time even as we see innovations come out of China and they will because we are forcing China to innovate. These two companies will still have a lot of white space to play in, so they'll make it up elsewhere over time. Near term though, there is, of course, that little bit of rerating on the stock. It was down, I think five or 6% on the news the day that they had their press release.

Mary Long: There's another branch of this that I want to touch on. It plays less to the changing export rules story, but more to the geopolitical situation, trade war situation more broadly. CEO of AMD, Lisa Su announced that the company will be producing key processor units in the United States for the first time. Historically, AMD has relied on manufacturers like Taiwan Semiconductor to build its chips. Historically, TSMC's manufacturing has taken place in you guessed it, Taiwan. Now though, TSMC has a new production facility in Arizona in the US and so more manufacturing will be able to take place stateside. The timing of this announcement, it was pretty recent. The timing of it makes it very easy to assume that, this movement, this change, this is the result of President Trump's trade war and the recent push for American manufacturing. But in actuality, these plans have been in place for a long time. Let's put the tariff situation aside for a moment. Big hypothetical, but let's just do that for the sake of conversation. What does making its chips in America mean for AMD on a cost basis? Again, putting the larger ever changing tariff situation aside for the moment.

Asit Sharma: I think it's a net positive on a cost basis. You would say glancing at this proposition how could it cost AMD less to have chips manufactured in the US versus Taiwan? Even though those chips have to be shipped over assembled in different components and pieces. Well, the answer is there's some opportunity cost here that plays into AMD's calculations. What if supply chains get disruptive? What if there's an earthquake in Taiwan which is a key risk that's always been there with TSMC. What if China invades Taiwan? That's always been a key risk. For AMD, on a long term basis for its supply, when it extrapolates costs of the chips themselves to its operating margin which you and I have been talking about, it makes sense to start having some of those chips made here. I think this is a big win for TSMC, because TSMC, for a long time itself didn't believe that it could be able to manufacture chips outside of Taiwan because they have such a specialised engineering workforce there. The Taiwanese, the engineers there, work incredible hours relative not just to the United States, but other parts of Asia.

I mean, these are specialized engineers who work very hard and it's extremely complex to make this advanced chip packaging. But TSMC has surprised itself. It's branched out into South Korea, it's branched out into Japan. It's branched out into Germany. It's branched out into Arizona of all places, and they are looking to have smaller and smaller node processes out of that Arizona facility which is a boon for TSMC, but it's also a boon for AMD because then that cost proposition doesn't look so bad. If it's a little more expensive to make it here in the US, well, you'll take that trade if you're AMD. Look, in a tariffs world, it makes even more sense. I think Lisa Su is feeling pretty good about those commitments and the decision to try to bring some of that manufacturing here and participate with TSMC. As a shareholder, I'm all for it.

Mary Long: We'll leave it there because Shocker Asit, I believe you and I are out of time, but always a pleasure. Thanks so much for shining a light on this company and how it exists in the ever changing geopolitical landscape.

Asit Sharma: Thanks a lot for having me, Mary. Always happy to talk AMD.

Ricky Mulvey: As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. While personal finance content follows Motley full editorial standards and are not approved by advertisers. Motley Fool only picks products that it would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.

American Express is an advertising partner of Motley Fool Money. Asit Sharma has positions in Advanced Micro Devices, Coca-Cola, and Nvidia. Mary Long has no position in any of the stocks mentioned. Matthew Argersinger has positions in Chipotle Mexican Grill, Coca-Cola, and Starbucks and has the following options: short June 2025 $90 puts on Starbucks. Ricky Mulvey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Berkshire Hathaway, Chipotle Mexican Grill, D.R. Horton, Nvidia, Starbucks, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

One of the things that makes Warren Buffett a widely admired investor is his willingness to share how he does it. Buffett has been a student of the market since his first stock purchase more than 80 years ago. He shares mistakes made and lessons learned every year in his letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders and at the annual shareholder meeting.

Investors also gain insights into his and his team's investments through Securities and Exchange Commission filings disclosing Berkshire's portfolio changes.

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While Buffett has been a net seller of stocks the past few years, he still oversees a portfolio worth $281 billion as of this writing. And nearly half of that is invested in just three exceptional stocks.

1. Apple (22% of portfolio value)

Buffett first bought shares of Apple (NASDAQ: AAPL) in 2016 when it traded at a valuation too low to ignore. Buffett saw the powerful moat created by the iPhone, locking hundreds of millions of consumers into the Apple ecosystem, and Berkshire Hathaway poured tens of billions of dollars into the stock duringthe next couple of years. At one point, Apple accounted for more than half of Berkshire's marketable equity portfolio. After selling a significant chunk in 2024, it now accounts for 22% of the portfolio.

As mentioned, Apple benefits from a wide competitive moat thanks to the success of its iPhone. Apple's iPhone sales topped $200 billion in each of the past three years, and sales are on track to grow in 2025. The iPhone is the center of Apple's growing ecosystem of devices and services, helping the rest of the business grow.

The services segment is a particularly bright spot for Apple, currently boasting a $100 billion annual run rate. Apple's services are significantly higher margin sources of revenue than its devices. As one of the fastest-growing segments of the business, Apple's overall profit margins are expanding as a result. When combined with Apple's huge share repurchase program, Apple is capable of producing meaningful growth in earnings per share.

Apple faces some headwinds, though. First of all, it's in the crosshairs of the tariffs planned by the Trump administration. Its supply chain relies heavily on China and Taiwan. As a result, its costs could increase and it may have to pass those expenses on to consumers. That could dent its device sales.

Additionally, Apple has been slow to develop competitive artificial intelligence services. It risks losing customers looking for more AI integrated capabilities from their phones and services. Apple customers tend to be locked into the ecosystem, which helps minimize that risk.

Apple stock has fallen from its late-2024 all-time high, trading more than 20% below its peak. At its current price, the stock's valuation is about 28 times forward earnings. While Apple isn't the fast grower it once was, it holds a lot of potential to unlock value with AI services in the future while its iPhone and services businesses remain rock solid today. As such, it looks like a fair price to pay for the tech giant.

2. American Express (16%)

American Express (NYSE: AXP) is a longtime holding for Buffett. He put about $1.3 billion into the stock in the 1990s and hasn't touched it since. Today, those shares are worth nearly $45 billion.

Amex separates itself from other credit card companies by operating as both the card issuer and as the payments network. Most issuing banks partner with Visa or Mastercard to remit payments to vendors from customer accounts. Doing both allows Amex to exercise more control over the business and capture more of the economics of card payments. To that end, it's done extremely well, commanding higher interchange fees from businesses by attracting affluent households to its high-fee products.

Amex has successfully raised the fees on its cards during the past few years. It reported an 18% year-over-year increase in net card fees during the first quarter, while its customers spent just 6% more compared to the first quarter of 2024. That said, the fees collected from processing payments is still its biggest source of revenue.

During the past few years, Amex has shifted strategies to offer more credit products to customers. Its charge cards historically required customers to pay their full balance each month, but Amex now lets customers pay over time with interest. Its interest income grew quickly from 2021 through 2024, but slowed to just 11% growth in the first quarter. That's mostly due to the law of large numbers, as interest income now accounts for nearly a quarter of its revenue.

Amex may be a bit more insulated from an economic slowdown compared to other banks and payment processors due to its focus on high-income households and lesser focus on interest income. As such, it's less susceptible to loan defaults. Amex trades for a significant premium relative to its most comparable competitor, Capital One Financial, but it arguably deserves a premium due to the strength of its customer base, its scale, and its ability to boost revenue through fee increases and more interest-bearing services.

3. Coca-Cola (10%)

Coca-Cola (NYSE: KO) is another stock Buffett bought more than 30 years ago and has no plans to sell anytime soon. His original $1.3 billion investment in the company (yes, the same amount he invested in Amex) is now worth about $29 billion. Not to mention, Coke's paid out more and more each year in dividends. Berkshire shareholders will collect roughly $816 million in dividends from Coca-Cola this year.

The appeal of the company is two-fold.

First of all, it has one of the strongest global brands in history. The red Coca-Cola logo is known the world over transliterated into practically every language known to man. Its brand strength extends well beyond its flagship product, though, to include top-selling carbonated drinks, water, juice, and sports drinks. That gives it considerable pricing power, which it has used to help offset inflation in recent years.

The second factor is its huge scale, which has made it cost-effective to create localized supply chains for producing and packaging its products. That's come to the fore in recent months as global trade policies put pressure on other global companies. Coca-Cola has managed to avoid the impact of tariffs more than its competitors, enabling it to keep its costs down. During its first-quarter earnings call, management warned it's not immune to global trade dynamics, but it's better positioned than most businesses.

Both of those advantages helped Coke produce strong first-quarter results while reaffirming its forecast for the full year. Revenue grew 6% and earnings per share grew 1%. Those numbers might not seem impressive, but they look great compared to Coke's biggest rival PepsiCo, which saw revenue and earnings per share shrink in the first quarter.

Coke's relative strength hasn't gone unnoticed. The stock price has climbed 15% year to date as of this writing, and the shares trade at 24 times forward earnings. That's higher than its historic average, but not outrageously so. With its strong position in the current economic environment, it might be worth paying a premium for Coca-Cola stock. You'll also collect a nice 2.8% dividend yield at the current price.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

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*Stock Advisor returns as of June 2, 2025

American Express is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple, Mastercard, and Visa. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.

American Express (NYSE: AXP) might not seem like a recession-resistant business, but you might be surprised. While it certainly has some vulnerability to a bad economy, Amex also has an affluent clientele and excellent asset quality that should allow the business to weather the storm better than its peers.

*Stock prices used were the morning prices of April 22, 2025. The video was published on April 23, 2025.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Should you invest $1,000 in American Express right now?

Before you buy stock in American Express, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

Now, it’s worth noting Stock Advisor’s total average return is 829% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

American Express is an advertising partner of Motley Fool Money. Matt Frankel has positions in American Express. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Stock markets got over their case of the Mondays really quick this week, and after regaining all their Monday losses on Tuesday, are roaring even higher as Wednesday gets off the ground.

Financial stocks are doing particularly well this morning. As of 10:20 a.m. ET, shares of Bank of America (NYSE: BAC) are gaining a respectable 2.8%, while JPMorgan Chase (NYSE: JPM) is doing even better with a 3.6% rise, and American Express (NYSE: AXP) is doing best of all -- up 5.4%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

The American stock market's big news day

What's behind the optimism? President Donald Trump, of course.

After spooking markets earlier in the week with threats to oust Federal Reserve Chairman Jerome Powell, Trump ratcheted back the rhetoric this morning, even going so far as to assure investors he has "no intention" of firing Powell (or at least not until the end of his term of office next May). This promise, for as long as it lasts, may be of particular reassurance to financial investors as they're more closely tied to moves by the Fed than anyone else, and were presumably more worried than others about what political pressure on the Fed might do to interest rate policy.

Meanwhile, in tariffs news, the president held out the prospect of falling tariffs on China, which holds the potential to both reduce strain on the American economy and -- potentially -- short-circuit an incipient global trade war that seemed all but certain to happen as recently as Monday. Both prospects diminish the chance of the U.S. falling into recession this year, and that's music to investors' ears.

Referring to tariffs on Chinese imports that have reached levels capable of potentially ending trade between the two countries entirely, the president opined that once negotiations run their course, tariffs on Chinese goods will probably come down "substantially." Forget 145% tariffs. They soon "won't be anywhere near that high."

Is it time to buy bank stocks?

Worries over tariff policy, and the recession risk they raise, have been especially concerning to the banking and credit card industries, reports The Wall Street Journal. As recently as this morning, that paper reported on how credit card companies are bracing for an economic downturn in which consumers stop spending because imported goods have become simply too expensive to buy.

All three of the banks named above were cited in the story, with Amex in particular warning that "consumers are holding off on nonessential splurges" and JPMorgan said to be ratcheting up reserves against an expected recession. The good news is that BofA says consumers are, for now, "still solidly in the game," however. And if Trump ends up calling off his trade war in time to avert a recession, things could turn out as well as investors today seem to feel they will.

Potentially, this could all work out very well indeed for investors brave enough to roll the dice at today's better-than-Monday, but still depressed, valuations. American Express stock is now trading for an unchallenging 17.6 times trailing earnings, while Bank of America and JPMorgan stocks look downright cheap at 11.4 and 11.6 times earnings, respectively.

Of the three, I personally prefer BofA and JPMorgan over Amex, though. Not only are their valuations more attractive, but JPMorgan also pays a 2.4% dividend yield, and BofA 2.7% -- both twice the dividend yield on Amex stock. If you're in the mood to do some bank stock shopping today, I'd start with those two.

Should you invest $1,000 in JPMorgan Chase right now?

Before you buy stock in JPMorgan Chase, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Chase wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

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*Stock Advisor returns as of April 21, 2025

American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy.

If you've got a pile of cash burning a hole in your pocket, consider putting it to work in the stock market. Long-term investing is a great way to build wealth, and few know this better than investing legend Warren Buffett, who has turned his once-modest holding company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), into a $1.1 trillion equity behemoth.

Below I'll discuss why Chinese electric-vehicle (EV) maker BYD (OTC: BYDDY) -- as well as shares in Berkshire Hathaway itself -- could be great buys right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

BYD

Since its 2003 founding in Shenzhen, China, BYD has been riding the wave of China's industrial miracle. It starting as a battery manufacturing and electronics company before pivoting to electric vehicles a few years later. Warren Buffett began buying shares in 2008 and now owns a substantial $2.5 billion worth of BYD equity, representing about 1% of Berkshire's total portfolio.

It's easy to see why he likes the company. Buffett tends to favor businesses with deep economic moats, which refers to the competitive advantage they have over industry rivals. In BYD's case, the moat is the company's vertical integration as it manufactures its own batteries at scale, enabling it to pass on cost savings to consumers.

However, BYD isn't just about low prices. The company has started to emerge as a technological leader.

In March, it unveiled a new technology capable of charging EVs in just five minutes, providing up to 249 miles of range. If this makes it into mass production, it could significantly close the convenience gap between electric cars and their gasoline-powered counterparts.

BYD's valuation is also too good to ignore. With a forward price-to-earnings ratio (P/E) of just 19.5, the shares are significantly cheaper than rival Tesla, which trade at a forward P/E of 84. Fourth-quarter profit jumped by an impressive 73% year over year to $2.1 billion.

Berkshire Hathaway

Instead of buying individual stocks, some investors may want to bet on the entire Berkshire portfolio. This move would enable greater diversification across various industries while leveraging Warren Buffett's holistic strategy and market-beating instincts.

Buffett has famously stated, "Never bet against America," referencing the country's tremendous business potential, even in the face of temporary setbacks. With multibillion-dollar positions in leading U.S. companies like Apple, Coca-Cola, and American Express, the Oracle of Omaha puts his money where his mouth is. And in terms of performance, Berkshire Hathaway has consistently beaten the S&P 500.

BRK.A Total Return Level data by YCharts.

Berkshire's edge may come from its ability to respond to changes in the macroeconomic landscape. In 2024, the holding company began raising eyebrows by selling stock and not reinvesting, ending the year with $334.2 billion in cash. Some analysts think this move may have been in anticipation of the tariff-led sell-off this year. Berkshire Hathaway is in a position to scoop up quality stocks for cheap when the dust settles.

Investors shouldn't expect Berkshire Hathaway to repeat the explosive growth it has experienced during past decades. The larger a portfolio is, the more challenging it becomes to grow. That said, the legendary holding company looks fully capable of maintaining its market-beating success.

Which stock is best for you?

BYD and Berkshire Hathaway are both excellent choices based on Warren Buffett's successful investing strategy. That said, investors who prioritize market-trouncing growth should look to BYD, due to its huge opportunity to scale its EV business globally. Berkshire Hathaway is another excellent choice, but its size and diversification make its performance more closely align with the S&P 500 average.

Should you invest $1,000 in BYD Company right now?

Before you buy stock in BYD Company, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and BYD Company wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $593,970!*

Now, it’s worth noting Stock Advisor’s total average return is 781% — a market-crushing outperformance compared to 149% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

American Express is an advertising partner of Motley Fool Money. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.

Shares of Apple (NASDAQ: AAPL) are currently 26% below their peak from December last year (as of April 10), a drop that has been spurred by ongoing tariff announcements. As of this writing, there is a huge 145% tariff that's implemented on goods leaving China for the U.S. If this remains in place, it could harm Apple, because 80% of its production is still based in China, according to estimates from Evercore.

For consumers, the result could be much higher prices. If the increased costs are eaten by Apple, on the other hand, its profitability will definitely take a hit. There remains a lot of uncertainty about how things will play out.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Despite the potential effects, which are commanding all the attention these days, Apple has proven to be successful in another area that highlights growing diversification in the business model. Here's what investors need to know.

Apple's push into financial services

In fiscal 2024 (ended Sept. 28, 2024), Apple generated $391 billion in revenue, of which 75% came from the sale of products. This includes its popular iPhone, Mac, and iPad lineups.

But the company's services division is an up-and-coming money-maker, growing revenue 13% in the latest fiscal year, much faster than the overall business. It represents the other 25% of Apple's total sales.

Within services, Apple is making a bigger push into the financial services realm, where it appears to have developed a strong foothold.

In 2014, the company launched Apple Pay, its digital wallet solution that lets users connect credit and debit cards to use for transactions in-store and online. More than 90% of retailers in the U.S. accept Apple Pay, which has more than 600 million global users and handles trillions of dollars in payment volume. This is undoubtedly becoming a widely used checkout option.

Apple Card was launched in 2019. This is a credit card that gives consumers up to 3% cash back with no fees whatsoever. Apple partnered with Goldman Sachs to handle the program. The credit card portfolio has 12 million customers (data from early 2024) and $20 billion in balances.

Valuable for partners

It was reported that Visa offered the tech titan a cool $100 million to end its relationship with Mastercard, the current card network for Apple Card. American Express is also in the mix. What's more, issuers like JPMorgan Chase, Capital One, Synchrony Financial, and others are reaching out to Goldman Sachs, offering to take over the $20 billion in balances and to handle the program.

It makes sense why these heavyweights in the financial services industry would be trying so hard to be Apple's partner. Apple generates enormous amounts of revenue, and its customers are generally known to be more affluent than average. Consequently, there is a lot of buying power here, which can lead to revenue opportunities for banks and payment networks.

Apple might be facing some headaches due to tariffs and how they can affect its device sales. But its payment and credit card offerings continue to shine brightly. Partners are jockeying for position.

Should you buy Apple stock on the dip?

This gets to the discussion of whether or not Apple shares are a smart buy right now, especially since they are 26% below their record high. The price-to-earnings ratio is better than it was in December -- it's now at a 30.2 multiple.

However, I'm not convinced the tech stock can produce a return over the next five years that can outperform the broader market. Not only is the valuation still elevated, Apple's growth prospects aren't that robust. Plus, there is the unfortunate overhang of the tariff situation.

This is a fantastic business. But investors should pass on buying shares.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

American Express is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Synchrony Financial is an advertising partner of Motley Fool Money. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Goldman Sachs Group, JPMorgan Chase, Mastercard, and Visa. The Motley Fool has a disclosure policy.

Warren Buffett has built a fortune in the stock market by playing the long game. Over the last 59 years, his investing skills guided Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) to an incredible return of more than 5,000,000%.

When the stock market falls, Buffett's top holdings are a great place to find quality stocks that you can be confident will bounce back. Here are two of his largest investments that are no-brainer buys right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

1. Apple

Apple (NASDAQ: AAPL) is Berkshire Hathaway's largest investment, with 300 million shares at the end of 2024. The iPhone maker is ranked as the most valuable brand in the world by Brand Finance. The company's robust profits earned from its products, on top of growing revenue from services, make it a solid investment for the long term.

Apple is poised to see more growth as it releases Apple Intelligence across more countries. It just rolled out these artificial intelligence (AI) features to iPhone and iPad users in Europe. In the last earnings report, CEO Tim Cook noted that iPhone 16 performance has been stronger in markets where Apple Intelligence is available.

That feature is a strong catalyst for growth. It promises to drive more upgrades and potentially convert customers of rival brands to switch to the iPhone, especially as Apple continues to improve its capabilities. The active installed base of its devices continues to hit record highs, which indicates growing brand appeal.

More devices in people's hands spell more opportunities to increase Apple's lucrative services segment. That division's revenue grew 14% year over year in the December-ending quarter and now comprises 21% of the company's total.

Buffett recognizes that Apple has tremendous brand power, which it uses to generate high margins from product sales. The company ended the last quarter with $141 billion of cash and marketable securities. It produced $96 billion of net profit over the last year and returned more than $15 billion to shareholders in dividends. It is printing cash like there's no tomorrow.

While Apple is not a high-growth business, it can raise the value of your investment. Analysts expect earnings to increase at an annualized rate of 10% over the next several years. A powerful brand and loyal customer base make it a solid long-term holding.

2. Berkshire Hathaway

Buffett's masterpiece is one of the best stocks you can hold in your retirement account. He continues to be the largest shareholder, with 38% of the Class A shares.

Berkshire owns dozens of businesses, along with a stock portfolio that was worth $271 billion at the end of 2024. The conglomerate's shares have run circles around the S&P 500 over the last five years, up 161% compared to the index's return of 88% at the time of this writing.

The stock has continued to outperform the broader market year to date. Most investors realize that a market sell-off can be valuable for Buffett to find opportunities to put more cash to work at attractive valuations, and therefore add more profitable revenue streams for Berkshire's business.

It entered the year with $331 billion in cash and short-term investments, providing plenty of firepower for Buffett to use if an opportunity presents itself. Berkshire's cash and stock holdings represent close to half of its $1.1 trillion market cap, which indicates solid value underpinning the stock right now.

That value is further supported by $47 billion of operating earnings from Berkshire's businesses last year. These include the Burlington Northern Santa Fe railroad; See's Candies; GEICO; Duracell; and one of the largest energy companies in the U.S., Berkshire Hathaway Energy. Total operating earnings are up 72% over the last three years.

Berkshire Hathaway is a no-brainer investment. Its growing earnings and large stakes in Apple, American Express, Coca-Cola, and several other outstanding businesses appear undervalued right now, making the stock a great buy.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

American Express is an advertising partner of Motley Fool Money. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

With stock prices all over the map right now, it's difficult to determine which companies might be good to invest in. When things are really uncertain, it's a good time to seek guidance from those who've weathered plenty of challenging times.

There's probably no one better in the investing world to turn to during these times than Warren Buffett. The billionaire investor and CEO of Berkshire Hathaway has amassed a $250 billion portfolio of stocks, and many of his picks have stood the test of time.

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If you're in the market for solid companies that could be great long-term picks, here are two no-brainer Buffett stocks to buy and hold.

1. Amazon: The e-commerce and cloud computing leader

Some investors are currently skeptical about Amazon (NASDAQ: AMZN). Many of the company's e-commerce sellers are highly dependent on goods from China -- which is currently in a trade war with the U.S. -- and any economic slowdown could potentially slow Amazon's sales.

However, while those concerns aren't unfounded, they might also be a bit overblown. It's important to remember that Amazon holds 40% of the e-commerce market share in the U.S., while Walmart is far behind with just 7%. This dominance means that U.S. consumers are unlikely to drop Amazon and look elsewhere for their purchases, no matter what happens with the economy.

Similarly, any slowdown from tariff pressure will be felt across the entire retail sector. Walmart sells a lot of goods made internationally. Amazon isn't especially vulnerable, and when tariffs eventually subside (even if that takes a while), the company will still retain its leading e-commerce position.

Finally, as important as e-commerce is to Amazon, the company's cloud computing business, Amazon Web Services (AWS), is the real moneymaker. AWS accounted for 58% of the company's operating income last year, even though it made up just 17% of its sales.

AWS is the leading cloud computing service, with a 30% market share compared to Microsoft's 21%. Artificial intelligence is accelerating cloud sales across the globe and will likely continue to do so for years to come. Goldman Sachs estimates AI cloud revenue will reach $2 trillion in five years.

Even if the U.S. economy hits some rough patches soon, Amazon's strong position in e-commerce and its lead in cloud computing should help the company continue growing. That doesn't mean its stock won't dip in the short term, but as a five-year investment or longer, Amazon is still in good shape. As of the end of 2024, Berkshire Hathaway held 10 million shares of Amazon.

2. American Express: A classic Buffett stock that's still growing fast

Like Amazon, American Express (NYSE: AXP) won't be immune to a potential economic slowdown if one materializes. Americans' credit card debt is already at record highs, reaching $1.21 trillion at the end of 2024. Financial pressures could cause some cardholders to scale back on things like vacations and could cause some difficulties in making payments. Neither is good for the economy or American Express.

But it's worth remembering that most economic slowdowns are often short-lived -- recessions last 17 months on average -- and any pullback on spending could be temporary. American Express is still growing quickly and is in a good position to continue doing so.

The company's revenue rose 9% to $65.9 billion, and earnings per share (EPS) popped 25% to $14.01 in 2024. Management expects EPS to jump 14% and for sales to climb 9% this year, at the midpoint of guidance.

Part of the company's strength comes from the 13 million new cardholders it added last year, 70% of which are using American Express' "fee-paying products" that charge annual fees.

American Express has been a longtime holding of Buffett's, with the famed investor buying shares for the first time in 1991. Even as Buffett has trimmed other positions, American Express remains Berkshire's second-largest holding.

It's also worth noting that American Express' price-to-earnings multiple is currently 16.7, down from 20 this time last year, which means you can pick up shares at a relative discount right now.

I understand the hesitation some investors might have in buying a credit card stock ahead of a potentially difficult economic time. But a few years from now, it's more likely than not that owning this solid player in the credit card space was a good stock to add to your portfolio.

A key piece of Buffett's investing advice

Buffett once quipped, "​​We don't have to be smarter than the rest. We have to be more disciplined than the rest." Those are timely words of wisdom as investors respond to market turmoil and consider picking up shares of some of Buffett's stocks.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $509,884!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $700,739!*

Now, it’s worth noting Stock Advisor’s total average return is 820% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Goldman Sachs Group, Microsoft, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The stock market has crashed. In just the last five trading days, the Nasdaq-100 index is down more than 10% and has officially entered a bear market, meaning it is down at least 20% from its recent high. That has created some panic among a subset of investors. Panic can be infectious, but you have to stay rational when Wall Street is being irrational. Now is not the time to start trading manically. Extend your time horizon and keep laser-focused on your long-term goals.

But what should you buy during this market crash? If you have cash sitting around, here are three stocks to buy during this market dip and hold for the ultra-long term.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Coupang's strong position in South Korea

If you're worried about tariffs, then Coupang (NYSE: CPNG) is a stock for you. Even though the company is listed in the United States, it does not operate in the country. The e-commerce marketplace is centered on South Korea, with some small exposure to Taiwan as well. South Korea just got hit with a tariff on exports to the United States, but that does not impact Coupang importing goods from other countries to South Korea. Sure, Coupang could be affected if the South Korean economy goes into a recession, but it is not directly hurt by tariffs.

The company looks strong enough to get through any economic volatility in South Korea that occurs, too. At the end of 2024, the company had close to $6 billion in cash on its balance sheet and minimal debt. It generated $1 billion of free cash flow last year. Gross profit -- a better top-line figure than revenue due to how Coupang does its accounting -- grew 29% year over year in the fourth quarter of 2024 when you exclude one-time gains and growth from acquisitions. This is much faster than the entire retail sector in South Korea, indicating that Coupang can grow simply through market share gains even if the broader economy slows down in Korea.

Coupang generated $30 billion in revenue last year. Over the long term, management believes it can achieve a 10% profit margin once the company stops reinvesting so aggressively for growth. That would be $3 billion in earnings at today's revenue level that can grow in the years to come. Today, Coupang stock trades at a market cap of around $36 billion, or just over 10 times these look-through earnings projections. That makes the stock dirt cheap for those who plan to hold for the long haul.

Take the long view with Amazon

A stock right in the line of fire with these tariffs is Amazon (NASDAQ: AMZN). As the largest e-commerce marketplace in the United States, the company sources a lot of supply from Asian nations now getting large tariffs slapped on exports. While this could hurt Amazon's financials in 2025, the company is set up to do just fine over the long term.

Most of Amazon's business is not selling online goods itself, but facilitating transactions for third-party sellers. This will help it push back against tariff volatility (although it may hurt a lot of its existing sellers). If a lot of Amazon sellers go bankrupt or have to rapidly switch supply chains, that is not a cost Amazon has to shoulder. Most of its investment has been in the United States, as opposed to other technology companies like Apple, which has most of its fixed costs in China and other Asian nations.

Amazon also makes a lot of money from advertising, subscription services, and the cloud computing division Amazon Web Services (AWS). AWS should still grow this year due to the boom in demand for artificial intelligence (AI) services. Advertising may see a slowdown if the broad economy tumbles, but over the long term it should remain a highly profitable division for Amazon.

The stock has tumbled to a market cap of $1.87 trillion and now has a forward price-to-earnings ratio (P/E) under 28, one of its lowest figures ever. Even if the numbers look bad in 2025, now looks like a fine time to buy Amazon stock for your portfolio.

Data by YCharts.

American Express and a resilient customer base

Financials, banks, and lenders can be very procyclical with the economic cycle. This means that when the economy is doing well, loans perform well and earnings are high. But when a recession occurs, rising loss rates and bankruptcies send earnings down rapidly. American Express (NYSE: AXP) gets tossed in this group as one of the largest credit card issuers in the United States. However, it is much more equipped to handle a recession than its peers.

American Express caters to a more affluent customer base with high credit scores. Even going through the elevated-inflation period of 2022 and 2023, the company's loss rates remained around 2%, which is around or below its pre-pandemic figures. A recession will likely cause these loss rates to increase, but the company is well-capitalized to deal with these temporary issues. Using history as a guide, it will do much better than other banks and lenders during a recession.

As of this writing, American Express stock is down almost 30% from all-time highs. I believe this is an example of the baby getting thrown out with the bath water. With the stock at a forward P/E of 15, you can buy American Express with confidence that it will perform well for your portfolio over the long haul.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $35,715!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $461,558!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of April 5, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Brett Schafer has positions in Amazon and Coupang. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool recommends Coupang. The Motley Fool has a disclosure policy.