The Best Stock to Buy Now: Amazon vs. MercadoLibre

Key Points

• MercadoLibre represents less than 5% of Amazon's market capitalization.
• Amazon has driven faster profit growth this year despite its much larger size.
• MercadoLibre significantly outperformed Amazon's revenue growth, but does this justify its higher earnings multiple?

It is understandable that Amazon and MercadoLibre are frequently compared. Both companies were pioneers in different parts of the world and then led new industries. Their businesses were distinct but also natural extensions of their e-commerce operations.

While Amazon has delivered higher total returns than MercadoLibre due to being listed for 10 more years, MercadoLibre has had the advantage during the time both stocks have been in the market. Investors comparing both options might wonder which is the better stock to buy now.

The case of Amazon

With nearly $2.5 trillion in market capitalization, many doubt whether Amazon's days of rapid growth are over. With such size, achieving high growth percentages becomes mathematically more difficult.

However, part of Amazon's ingenuity has been to circumvent this problem by acting as an umbrella for several smaller but rapidly growing businesses. Its online store business continues to be its largest source of revenue, although the low margins make it unclear whether it is a profitable company to this day.

Instead, it derives most of its operating income from Amazon Web Services (AWS). On the e-commerce side, the fastest growth comes from light asset businesses such as digital advertising, third-party seller services, and subscriptions.

In the first half of 2025, their revenues of 323 billion grew by 11% compared to the previous year. Although this is below past growth rates, by keeping costs under control, the 35 billion in profits represented a 48% increase.

What I find interesting is that, despite this growth, the stock has only risen 5% this year. With a P/E of 35, just above the S&P 500 average of 31, Amazon is becoming an increasingly attractive value.

Why consider MercadoLibre

With a market capitalization of 127 billion, MercadoLibre represents approximately 5% of Amazon's size, a level that will likely allow for greater long-term growth. Its business model also resembles a second chance for Amazon, although with mostly different businesses.

In the past, its local market in Latin America was a predominantly cash-based society, where a large part of the population did not have a bank account or credit card. For this reason, it formed Mercado Pago to offer digital payment products.

The company was so successful that it expanded to users who did not shop on MercadoLibre. It repeated this approach when it formed Mercado Envíos, which brought same-day and next-day deliveries to Latin America, an offering that had not been widely available in the region.

MercadoLibre generated 13 billion dollars in revenue in the first half of 2025, a 35% increase compared to the same period of the previous year.

However, I am concerned that the increase in provisions for doubtful accounts and MercadoLibre's investments in its operations led to a 38% increase in expenses. Furthermore, the company suffered a more significant blow from foreign currency losses, and tax expenses rose. Thus, the net profit for the first half of the year was 523 million, a decrease of nearly 2%.

Despite the drop in profits, the stock has risen nearly 50% this year. Considering Amazon's historically highest valuation, we should not assume that MercadoLibre's P/E of 62 will prevent its stock from continuing to rise.

Amazon or MercadoLibre?

Over time, both actions should outperform the market, although MercadoLibre is likely to have an advantage.

Amazon has produced greater profit growth this year and is trading at a much lower valuation.

However, MercadoLibre is growing its revenues at a faster pace, and the rapid increase in its expenses seems to be temporary. Moreover, its smaller size means that it will be easier to achieve a higher percentage growth.

Ultimately, these conditions likely led to the faster growth of MercadoLibre's stock price. As it continues to develop its synergies and the overall successes of its businesses, it is more likely that its stock will rise at a faster pace.