The world is infatuated with anything artificial intelligence (AI) or energy in 2026. These trends have driven the S&P 500 index up 7% year to date, despite fits and starts amid the U.S. conflict in Iran and the closure of the Strait of Hormuz. Some stocks, including Micron Technology, are up by more than 100% so far this year.
Index fund investors have gotten quite rich in this environment. But the index has also been driven to a high price-to-earnings ratio (P/E), with many stocks trading at expensive levels. For contrarian investors, now is the time to look away from the heavy hitters of the S&P 500 to cheaper stocks around the world.
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Here’s one technology stock I like more than anything in the S&P 500 right now: MercadoLibre (NASDAQ: MELI).
E-commerce acceleration
MercadoLibre is the largest e-commerce player in Latin America, with a presence in every large economy in the region. Over the years, the company has compounded its revenue in a similar way to Amazon, driving growth by expanding its product selection and improving the availability of fast, free shipping for premium members.
In recent years, competition in e-commerce in Latin America has increased, driven by players such as Amazon. To maintain its lead in Brazil and other places, MercadoLibre is pressing the accelerator to offer better selection and faster shipping across all items sold on its marketplace. This approach includes lowering free shipping thresholds, increasing the number of cross-border merchants from the likes of China and the United States, and adding first-party selections sourced by MercadoLibre to widen its selection for consumers.
All of these investments are paying off with accelerating revenue growth. For example, in Brazil, gross merchandise volume (GMV) sold on the platform grew 38% year over year in local currency last quarter, its fastest growth in five quarters. The more volume processed through MercadoLibre’s network, the more leverage it will obtain on its fixed infrastructure costs and free delivery benefits.
In the short run, this situation is leading to margin compression. Income from operations decreased by 20% last quarter, but, as with Amazon in the United States, these investments are setting MercadoLibre up for steady growth over the next decade.
More monetization layers
What is underrated about MercadoLibre is the high-margin monetization levers it has built, which it can layer on top of its e-commerce network. First, there’s advertising revenue, which grew 63% year over year in local currencies last quarter, faster than overall revenue. This is high-margin revenue that can offset the slim margins in standard e-commerce and delivery sales.
Read More: The 1 Tech Stock I Think Has More Upside Than Anything Else in the S&P 500
