Geopolitical crises often create winners and losers in the stock market, but for a certain set of investors, investing remains more about surviving the uncertainties. The conflict in Iran is one such crisis that has significantly disrupted global supply chains, forcing even the most durable of American businesses to deal with delays and uncertain prices.
JP Morgan just came out with an update to solve exactly this problem. Their answer: American Express (NYSE:AXP). The firm upgraded the financial services stock from Neutral to Outperform, boosting the price target from $328 to $400. Their reasoning is simple: American Express’ revenue is tied to a customer base that is relatively affluent, easily able to weather any inflationary pressure resulting from higher energy prices and higher interest rates, both of which continue to be major risks for investors today.
“AXP’s affluent, high-income customer base is relatively shielded from the Middle East crisis and the associated energy squeeze, as these consumers spend a far smaller share of disposable income on fuel.”
The firm’s target price offers 13% upside from here on, which may not impress many. However, JP Morgan’s reasoning is that the stock protects the investor from uncertainties arising from higher oil prices and supply chain disruptions. The premium that investors are paying at a forward earnings multiple of 19.75x compared to the sector median of 12x and the company’s own 5-year average of 17.9x is, in their view, worth the downside protection against today’s uncertain environment.
Apart from valuation concerns, investors also need to account for a possible reduction in international travel. While AXP’s consumers may not be bothered about rising prices, as JP Morgan just pointed out, they are likely to cut down on travel itself in case of regional conflicts. Rising competition from more nimble fintech players could also be a concern for investors. In its update released on June 30, BTIG pointed out this risk, warning about weakness in consumer spending among younger consumers. BTIG has a Sell rating on the stock with a price target of $324.
The company’s defensive nature is likely one reason why 85 hedge funds held the stock in their portfolios as of Q1 2026. However, hedge funds are significantly more bullish on another credit card stock, Capital One Financial (COF) (check out the hedge fund sentiment here). Sentiment on Capital One (COF) is highly conditional on its $35 billion takeover of Discover Financial. If Capital One (COF) successfully migrates millions of Discover cardholders onto its network seamlessly, it will become a potent closed-loop competitor to Visa (V) and Mastercard (MA). However, the slow conversion runway and regulatory scrutiny create near-term execution overhangs that keep risk-averse investors on the sidelines. So, even though there are risks, hedge funds believe COF is a better investment than American Express (AXP) at the moment.
Insider Monkey, on the other hand, believes that some AI stocks still offer much higher upside than AXP and COF. We just published a report about an extremely undervalued AI stock. You can check out our report about this cheapest AI stock.
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