Best Growth Stock to Buy Right Now: Amazon vs. MercadoLibre

MercadoLibre's revenue scaled from $1B to $29B over the last decade and in Q4 2025 reported revenue growth of 47% in constant currency, TPV +53% and GMV +37%, but operating margin compressed to 10.1%. Amazon shows margin expansion with a 11.8% LTM operating margin, North American retail sales +10% YoY and AWS revenue accelerating to +24% YoY; both trade at similar EV/EBIT multiples, but MercadoLibre's faster growth and potential for margin recovery make it the more attractive buy today.

Analysis

MercadoLibre’s combined marketplace + embedded finance model is structurally advantaged in Latin America because payments and credit create a feedback loop that hardens customer and merchant retention; management’s decision to trade short‑term margin for share gain increases the probability of a wider moat but also amplifies exposure to regional macro and credit cycles. The immediate market reaction discounts future operating leverage; the correct lens is medium‑term FCF trajectory rather than next quarter OPM — if unit economics normalize as scale benefits of logistics and credit underwriting kick in, valuation expansion is the likely path.

Amazon’s current margin inflection is a different animal: it’s a maturity play driven by margin recovery in retail plus disproportionate optionality from AI demand at AWS. Second‑order effects include higher capital intensity in infrastructure (which benefits chip and infra suppliers) and tougher competition for retail gross margin as Amazon optimizes mix and pricing elasticity — that reduces the chance of re-rating from multiple expansion alone.

Key tail risks are region‑specific: abrupt currency or regulatory shifts in LATAM can re-price MercadoLibre’s credit book and working capital overnight, while a slowdown in AI capex could compress AWS multiple growth expectations. Catalysts that would flip market sentiment are identifiable within 1–4 quarters (FX stability, demonstrable recovery in credit loss metrics, or a clear path to positive operating leverage) versus multi‑year outcomes for full moat realization.

The optimal tactical posture is asymmetric: express conviction in MercadoLibre’s growth optionality but hedge idiosyncratic country risk and timeline — prefer option structures or pair exposures that monetize a quicker margin recovery while limiting drawdowns if regional macro re‑accelerates adverse trends.

Key Decisions for Investors

• Long MELI via LEAPs: Buy 12–18 month calls sized to equal 3–5% of NAV (or buy equivalent stock for the same exposure). Rationale: asymmetric upside if margin recovery/FT adoption accelerates; max loss = option premium, target 2–3x in 12–24 months. Hedge with 1–2% NAV of 12–18 month puts if you want downside protection against a LATAM macro shock.
• Pair trade — long MELI / short AMZN (dollar‑neutral) over 6–18 months: express conviction in faster relative growth and re‑rating potential for MELI while neutralizing broader market/AI exposure. Size short leg at 50–70% notional of long to cap portfolio beta. Expect 1.5–2x return if relative catalysts (FX stabilization, credit normalization) occur; downside is dominated by global drawdowns and AWS re‑rating.
• Options income hedge — sell an OTM put spread on MELI (9–12 month) financed by selling a capped call on a liquid US large cap (e.g., AMZN) to reduce cost: collects premium while keeping directional exposure. Use this if you want to monetize neutral-to-bullish bias; max risk is defined by spread width, reward = collected premium plus potential assignment upside.
• Risk trigger & monitoring rules: reduce gross MELI exposure if country FX indices deteriorate by more than a pre‑set threshold within 30 days or if 3‑month rolling credit losses persist above historical range. Conversely, add to exposure on two consecutive quarters of improving credit metrics and merchant take‑rate stabilization — intended time horizon 12–36 months.