Key Points
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MercadoLibre is growing quickly in Latin American e-commerce and financial technology, but is seeing compressing margins.
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Amazon’s profit margin inflection has finally arrived.
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Both stocks should turn things around for investors, but MercadoLibre looks like the better buy for investors today.
- 10 stocks we like better than MercadoLibre ›
Despite making massive gains for shareholders over the last 20 years, both Amazon (NASDAQ: AMZN) and MercadoLibre (NASDAQ: MELI) have underperformed the S&P 500 index over the last five years. That’s right, the two e-commerce giants have delivered only meager gains in recent years, trailing a stock market index that has delivered a total return of 86% over the last five years alone.
The two businesses continue to hum along, with dual growth engines alongside their core e-commerce and logistics marketplaces. But which one is the better buy today?
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Here’s what the data says.
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MercadoLibre’s growth opportunity
MercadoLibre operates as a financial technology and e-commerce giant in many Latin American markets, including Brazil, Argentina, and Mexico. With payment technology, logistics infrastructure, and a wide selection of products, MercadoLibre’s scale in the marketplace allows it to offer significant discounts to customers while still generating a profit.
This has led to massive revenue growth as the business reinvests to expand its services. In the last 10 years, MercadoLibre’s revenue has grown from $1 billion to $29 billion in 2025, driven by the expansion of its fintech and e-commerce platform across a wide range of Latin American geographies.
Growth continued in the fourth quarter of 2025, with overall revenue growth of 47% in constant currency, total payment volume (TPV) of 53%, and gross merchandise volume (GMV) of 37% on its e-commerce platform. And yet, investors decided to sell the stock after the report due to compressing profit margins, with an operating margin of 10.1% in the quarter.
Even with these depressed margins, MercadoLibre trades at an enterprise value-to-EBIT (earnings before interest and taxes) ratio of 27. If this revenue growth can continue alongside a recovery in its profitability, MercadoLibre stock will do well for investors in the years to come.
Amazon’s margin expansion?
Amazon is in a more mature phase of its business, at least in e-commerce. The retail operation has become much more profitable in recent years, pushing the overall operating margin to 11.8% over the last 12 months, an all-time high. North American retail sales are still growing 10% year over year, which is driving strong operating leverage for the company.
The less mature part of the business is the cloud division called Amazon Web Services (AWS). It is benefiting massively from the artificial intelligence (AI) revolution, with revenue growth accelerating to 24% year over year last quarter.
While Amazon should do well for investors going forward because of the steady margin expansion in retail and growth of AI, the company is growing much more slowly than MercadoLibre stock today. Plus, Amazon trades at a similar EV/EBIT multiple and has been expanding its profit margins, while MercadoLibre temporarily compresses them to accelerate growth.
MercadoLibre is a faster-growing business than Amazon and has more margin expansion potential. At the same earnings multiple, MercadoLibre stock is the better buy today.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
