Market Rotation: Software to Hardware Shift
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 23 2026
0mins
Source: CNBC
- Market Dynamics: During Thursday's livestream, Jim Cramer highlighted that the S&P 500 and Nasdaq indices experienced a rotation from software to hardware following a 17% drop in ServiceNow shares, which, despite beating earnings expectations, cited the Iran war as a drag on subscription revenue growth.
- Hardware Stock Performance: Chip designer Arm led the hardware rally with a roughly 6% increase, reaching all-time highs, and has risen over 20% since we initiated a position three days ago; Jim called it an 'incredible move' but expressed concerns about CEO Rene Haas's expanded role at SoftBank.
- Procter & Gamble Outlook: Procter & Gamble's stock rose over 1%, trading around $145, with Jim indicating he would consider buying more if it drops below $140, expressing optimism about new CEO Shailesh Jejurikar, while the Street anticipates about 1% EPS growth and slightly below 2% organic revenue growth.
- Quick Recap: In Thursday's rapid-fire segment, Jim covered stocks including American Express, IBM, Tesla, Texas Instruments, and Thermo Fisher, emphasizing his ongoing focus on these companies and reminding subscribers that they will receive trade alerts before any transactions.
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Analyst Views on AXP
Wall Street analysts forecast AXP stock price to rise
21 Analyst Rating
8 Buy
12 Hold
1 Sell
Moderate Buy
Current: 315.120
Low
280.00
Averages
379.06
High
425.00
Current: 315.120
Low
280.00
Averages
379.06
High
425.00
About AXP
American Express Company is a global payments and premium lifestyle brand powered by technology. Its card-issuing, merchant-acquiring and card network businesses offer products and services to a broad range of customers, including consumers, small businesses, mid-sized companies and large corporations around the world. Its range of products and services includes credit and charge cards and complementary products and services, including travel, dining, lifestyle and expense management products and services; banking and other payment and financing products and services, including deposits and non-card lending; merchant acquisition and processing, servicing and settlement, fraud prevention, and point-of-sale marketing and information products and services, and network services. These products and services are offered through various channels, including mobile and online applications, affiliate marketing, customer referral programs, third-party service providers, and business partners.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Impact of U.S. Consumer Spending on Financial Stocks
- Consumer Spending Share: Consumer spending accounts for 70% of U.S. GDP, prompting investors to focus on companies like American Express and Visa that benefit from this metric, both of which have outperformed the S&P 500 over the past decade, indicating strong market performance.
- Business Model Differences: American Express operates a closed-loop payment system limited to its cards, capturing fees from merchants and cardholders while earning interest, whereas Visa functions as an open-loop system, acting as a toll booth that collects transaction fees, showcasing distinct profit models and risk management strategies.
- Financial Performance Comparison: Visa's quarterly operating margin averaged 67.3% over the past five years, significantly higher than American Express's 20.6%, enabling Visa to return $1.3 billion in dividends and repurchase $7.9 billion in stock in Q2 2023, demonstrating its robust capital return capability.
- Growth Trend Analysis: Over the past five years, American Express's diluted EPS grew at a compound annual rate of 9.3%, while Visa's soared at 17.9%, indicating Visa's stronger advantage in profit growth and market valuation, attracting more investor interest.
See More
Impact of Stablecoins on Payment Industry
- Rise of Stablecoins: Stablecoins have gained popularity due to their peg to the U.S. dollar, enabling low-cost, instant transfers over blockchain, posing a potential threat to PayPal, which saw its active accounts grow from 426 million in 2021 to only 439 million by 2025 amid slowing growth.
- Credit Card Giants' Response: Visa and Mastercard do not issue cards directly but rely on banks, generating revenue primarily through 1%-3% swipe fees; while stablecoins may pressure these fees, most businesses prefer to accept these widely used cards to maintain their customer base.
- Challenges for PayPal: PayPal's revenue model, which relies on transaction fees, is undermined by stablecoins offering instant transfers and lower costs, placing it at a disadvantage in an increasingly competitive digital payment landscape.
- Market Outlook Analysis: Although PayPal launched its own stablecoin, PayPal USD, to counter competition, this indicates a lowering of market entry barriers, suggesting that more stablecoin-powered payment platforms may emerge, further fragmenting market share.
See More
Visa, Mastercard, and Amex Integrate Stablecoins into Payment Networks
- Stablecoin Threat: Stablecoins, which are pegged to the U.S. dollar and allow for low-cost, instant transfers, have gained popularity, posing a greater threat to PayPal, which saw its active accounts grow only from 426 million in 2021 to 439 million in 2025, while Visa, Mastercard, and American Express remain less affected.
- Payment Network Integration: Visa and Mastercard do not issue their own cards but rely on banks to do so, generating revenue primarily through 1%-3% swipe fees; despite merchant demands for lower fees, most businesses continue to accept their widely used cards, indicating their strong market position.
- Consumer Protection Advantage: Visa and Mastercard offer robust consumer protection, fraud prevention, and dispute resolution services that stablecoins lack, leading them to test stablecoins for payment settlements within their networks, thereby enhancing their payment systems' efficiency.
- Amex's Unique Positioning: American Express, operating its own bank, targets affluent customers with attractive loyalty programs and travel services while exploring stablecoin usage, showcasing its competitive edge in the high-end market.
See More
Buffett's Investment Legacy Continues
- American Express Success: Buffett's investment in American Express since 1964, holding 22% of shares, has resulted in consistent profitability despite economic fluctuations, and is expected to continue generating substantial returns for Berkshire.
- Alphabet's Diversified Growth: Alphabet's annual revenue surged from $258 billion to nearly $403 billion over the past five years, with its core search engine and cloud services performing strongly, laying a solid foundation for future growth despite some businesses not yet being profitable.
- Apple's Market Leadership: With a market value exceeding $700 billion, Apple remains a significant holding for Berkshire, as its products and services continue to thrive, particularly in the services ecosystem, ensuring future growth potential.
- Coca-Cola's High-Profit Model: Coca-Cola operates with net profit margins in the mid-20% range and has consistently increased its dividends, earning the title of 'Dividend King', with a business model that relies on selling foundational syrups, ensuring stable cash flow and long-term investor returns.
See More
Buffett's Recommended Investment Strategy
- Investment Philosophy: Buffett has successfully achieved a market-beating compounded annual gain over 60 years by identifying companies with competitive advantages and strong management, showcasing his investment acumen and long-term holding strategy.
- Recommended Asset: The investment Buffett frequently endorses is the S&P 500 index fund, which he believes offers non-professional investors exposure to a wide array of quality companies, with its low-cost nature making it particularly appealing.
- Long-Term Returns: Since its inception in the late 1950s, the S&P 500 has posted an average annual return of 10%, indicating that by investing in this ETF, investors can avoid the stress of stock selection and are likely to see wealth growth over the long term.
- Power of Compounding: Assuming an initial investment of $1,000 with an additional $300 monthly for 35 years, the investment could exceed $1 million, demonstrating the power of compounding and encouraging investors to adhere to a long-term investment strategy.
See More
ASID Launches Purpose-Built Credit Card for Designers
- Credit Card Partnership: Mercantile has partnered with the American Society of Interior Designers (ASID) to launch the American Express® Business Card tailored for designers, aimed at addressing the cash flow needs of independent designers and small design firms, thereby enhancing their project expense management.
- Financial Tool Innovation: The new card offers flexible credit limits and reward mechanisms to help designers navigate complex project timelines and client payment cycles, thus improving operational efficiency and promoting sustainable growth.
- Industry Support: ASID President Khoi Vo emphasized that this partnership reflects ASID's commitment to strengthening the business side of design, highlighting the importance of providing designers with the right resources to focus on creating spaces that enhance people's lives.
- Market Expansion Plans: This ASID program marks the beginning of Mercantile's collaboration with various professional associations, with plans to roll out more credit card programs tailored to the unique needs of different professions, further supporting the growth of small businesses and entrepreneurs.
See More
Impact of U.S. Consumer Spending on Financial Stocks
- Consumer Spending Share: Consumer spending accounts for 70% of U.S. GDP, prompting investors to focus on companies like American Express and Visa that benefit from this metric, both of which have outperformed the S&P 500 over the past decade, indicating strong market performance.
- Business Model Differences: American Express operates a closed-loop payment system limited to its cards, capturing fees from merchants and cardholders while earning interest, whereas Visa functions as an open-loop system, acting as a toll booth that collects transaction fees, showcasing distinct profit models and risk management strategies.
- Financial Performance Comparison: Visa's quarterly operating margin averaged 67.3% over the past five years, significantly higher than American Express's 20.6%, enabling Visa to return $1.3 billion in dividends and repurchase $7.9 billion in stock in Q2 2023, demonstrating its robust capital return capability.
- Growth Trend Analysis: Over the past five years, American Express's diluted EPS grew at a compound annual rate of 9.3%, while Visa's soared at 17.9%, indicating Visa's stronger advantage in profit growth and market valuation, attracting more investor interest.
See More
Impact of Stablecoins on Payment Industry
- Rise of Stablecoins: Stablecoins have gained popularity due to their peg to the U.S. dollar, enabling low-cost, instant transfers over blockchain, posing a potential threat to PayPal, which saw its active accounts grow from 426 million in 2021 to only 439 million by 2025 amid slowing growth.
- Credit Card Giants' Response: Visa and Mastercard do not issue cards directly but rely on banks, generating revenue primarily through 1%-3% swipe fees; while stablecoins may pressure these fees, most businesses prefer to accept these widely used cards to maintain their customer base.
- Challenges for PayPal: PayPal's revenue model, which relies on transaction fees, is undermined by stablecoins offering instant transfers and lower costs, placing it at a disadvantage in an increasingly competitive digital payment landscape.
- Market Outlook Analysis: Although PayPal launched its own stablecoin, PayPal USD, to counter competition, this indicates a lowering of market entry barriers, suggesting that more stablecoin-powered payment platforms may emerge, further fragmenting market share.
See More
Visa, Mastercard, and Amex Integrate Stablecoins into Payment Networks
- Stablecoin Threat: Stablecoins, which are pegged to the U.S. dollar and allow for low-cost, instant transfers, have gained popularity, posing a greater threat to PayPal, which saw its active accounts grow only from 426 million in 2021 to 439 million in 2025, while Visa, Mastercard, and American Express remain less affected.
- Payment Network Integration: Visa and Mastercard do not issue their own cards but rely on banks to do so, generating revenue primarily through 1%-3% swipe fees; despite merchant demands for lower fees, most businesses continue to accept their widely used cards, indicating their strong market position.
- Consumer Protection Advantage: Visa and Mastercard offer robust consumer protection, fraud prevention, and dispute resolution services that stablecoins lack, leading them to test stablecoins for payment settlements within their networks, thereby enhancing their payment systems' efficiency.
- Amex's Unique Positioning: American Express, operating its own bank, targets affluent customers with attractive loyalty programs and travel services while exploring stablecoin usage, showcasing its competitive edge in the high-end market.
See More
Buffett's Investment Legacy Continues
- American Express Success: Buffett's investment in American Express since 1964, holding 22% of shares, has resulted in consistent profitability despite economic fluctuations, and is expected to continue generating substantial returns for Berkshire.
- Alphabet's Diversified Growth: Alphabet's annual revenue surged from $258 billion to nearly $403 billion over the past five years, with its core search engine and cloud services performing strongly, laying a solid foundation for future growth despite some businesses not yet being profitable.
- Apple's Market Leadership: With a market value exceeding $700 billion, Apple remains a significant holding for Berkshire, as its products and services continue to thrive, particularly in the services ecosystem, ensuring future growth potential.
- Coca-Cola's High-Profit Model: Coca-Cola operates with net profit margins in the mid-20% range and has consistently increased its dividends, earning the title of 'Dividend King', with a business model that relies on selling foundational syrups, ensuring stable cash flow and long-term investor returns.
See More
Buffett's Recommended Investment Strategy
- Investment Philosophy: Buffett has successfully achieved a market-beating compounded annual gain over 60 years by identifying companies with competitive advantages and strong management, showcasing his investment acumen and long-term holding strategy.
- Recommended Asset: The investment Buffett frequently endorses is the S&P 500 index fund, which he believes offers non-professional investors exposure to a wide array of quality companies, with its low-cost nature making it particularly appealing.
- Long-Term Returns: Since its inception in the late 1950s, the S&P 500 has posted an average annual return of 10%, indicating that by investing in this ETF, investors can avoid the stress of stock selection and are likely to see wealth growth over the long term.
- Power of Compounding: Assuming an initial investment of $1,000 with an additional $300 monthly for 35 years, the investment could exceed $1 million, demonstrating the power of compounding and encouraging investors to adhere to a long-term investment strategy.
See More
ASID Launches Purpose-Built Credit Card for Designers
- Credit Card Partnership: Mercantile has partnered with the American Society of Interior Designers (ASID) to launch the American Express® Business Card tailored for designers, aimed at addressing the cash flow needs of independent designers and small design firms, thereby enhancing their project expense management.
- Financial Tool Innovation: The new card offers flexible credit limits and reward mechanisms to help designers navigate complex project timelines and client payment cycles, thus improving operational efficiency and promoting sustainable growth.
- Industry Support: ASID President Khoi Vo emphasized that this partnership reflects ASID's commitment to strengthening the business side of design, highlighting the importance of providing designers with the right resources to focus on creating spaces that enhance people's lives.
- Market Expansion Plans: This ASID program marks the beginning of Mercantile's collaboration with various professional associations, with plans to roll out more credit card programs tailored to the unique needs of different professions, further supporting the growth of small businesses and entrepreneurs.
See More
