As anyone who follows the market closely knows, tech stocks have sold off in recent weeks. While the industry delivered on technical breakthroughs and massive revenue growth for investors, rising interest rates, along with concerns about the staggering cost of artificial intelligence (AI) build-outs, weighed on those stocks.
Fortunately, investors have more options than tech and the “Magnificent Seven.” In my view, the sell-off is an excellent opportunity to consider other investments. Right now, I hold and periodically add to my position in MercadoLibre (NASDAQ: MELI), and here’s why.
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Why MercadoLibre?
Indeed, one might question the choice of MercadoLibre on the surface since it is tech-adjacent. Its e-commerce and fintech platforms depend on technology, and the company has applied AI in many of its applications. Also, in one sense, it can represent a second chance for investors who missed out on Amazon, as MercadoLibre leads the e-commerce market in Latin America.
However, MercadoLibre differs from Amazon in that it is not a cloud service provider. Thus, it has not had the massive capital expenditures (capex) that have weighed on Amazon. In the first half of 2026, MercadoLibre’s capex was $712 million, a tiny fraction of the $98 billion Amazon allocated over the same period.
Furthermore, while MercadoLibre has not followed Amazon into the cloud, the consumer discretionary stock has clearly evolved into a conglomerate. Addressing the economic and political challenges in Latin America appears to have inspired that move.
When Latin America was more of a cash-based society and millions could not buy online, Mercado Pago was founded to offer digital financial products to these customers. Mercado Pago went on to serve customers not buying on MercadoLibre’s e-commerce site and became the top fintech company in Latin America.
MercadoLibre employed the same strategy to improve logistics. Consequently, that enterprise, Mercado Envios, brought same-day and next-day delivery to the region.
Addressing company struggles
Nonetheless, even for those who can buy into its strategy of turning adversity into opportunity, choosing MercadoLibre may sound counterintuitive. Investors have sold the stock off over the last year. The company cut margins to stave off e-commerce competition and dramatically increased the allowance for doubtful accounts (i.e., bad loans) as it aggressively expands its loan book.
