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

Tariffs, inflation, and oil prices seem to have receded into the distance for the market, even if they still present obstacles to the economy. The S&P 500 continues to rise, up 9% this year, as investors remain buoyant about opportunities in artificial intelligence (AI).

In a thriving bull market, growth stocks are always in demand. Amazon (NASDAQ: AMZN) and MercadoLibre (NASDAQ: MELI) are top growth stocks with many similarities. Let's see how they compare and which one might be the better growth stock today.

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The case for Amazon: AI and more

Amazon, as a brand, kind of speaks for itself. It's a global e-commerce and cloud giant with many revenue streams and the ultimate growth segment today: artificial intelligence (AI).

E-commerce remains Amazon's engine, and investors shouldn't overlook its growth and opportunities. The company has made a huge push into grocery, and it's now the second-largest grocer in the U.S. It serves 2,300 cities with same-day delivery and plans to keep expanding. It also leads to a positive cycle of growth, since grocery customers buy almost three times as many items and spend 80% more than non-grocery customers.

AI, however, is where the major opportunity is right now. "We have never seen a technology grow as rapidly as AI," CEO Andy Jassy said in the first-quarter earnings report, and there were multiple signs of this rapid growth.

Its signature AI platform, Bedrock, is used by 80% of Fortune 100 companies, and customer spend on Bedrock increased 170% year over year in the first quarter. Amazon's AI agent creation product, Strands Agents, has been downloaded 25 million times, including a 200% quarter-over-quarter increase in the first quarter. Its agent deployment product, AgentCore, deploys an agent as frequently as every 10 seconds. Developers using Amazon's Kiro product doubled from last quarter, and enterprise usage rose nearly 10-fold. These are just examples of how the AI business is soaring.

Since AI happens through the cloud business, cloud revenue growth is accelerated. It increased 28% year over year in the first quarter, the highest growth in 15 quarters, and on a much larger base.

Amazon is well-positioned to keep up its growth, and the market is finally on board. The stock price had been stuck for a while when the market was disappointed with its massive capital expenditure, but investors are starting to realize how important the build-out is to capture market share in the soaring AI space. Amazon stock is up 15% this year, outpacing the market.

The case for MercadoLibre: The digital shift

MercadoLibre started out much the same way as Amazon, as an e-commerce company, and it has also moved into new areas, specifically fintech. It's the dominant e-commerce company in Latin America, a region still underdeveloped in both e-commerce and digital financial services, which is why the opportunity looks so compelling.

It regularly reports high growth, including a 46% year-over-year increase in revenue in the first quarter (currency neutral). Management noted that "26 years after launch, Mercado Libre is growing at start-up rates across all of our major markets."

It has many levers to pull to keep that up, giving it a long growth runway. For example, it recently lowered its free shipping threshold in Brazil, its largest market, and growth is accelerating in all sorts of ways. Gross merchandise volume growth accelerated to 38% year over year, while unique active customer growth accelerated to 32%, the highest growth in five years.

The opportunity is still vast. Management pointed out that the average American makes 41 online purchases annually, while the average in its own region is seven. For its users, the average is 11, but it's still well behind its neighbors to the north, and the company continues to improve its value proposition to effect a shift.

The fintech opportunity is equally exciting. Monthly active users increased 29% year over year in the first quarter, or nearly 20 million additions. That's equivalent to the entire population of Chile. The credit portfolio increased 87% over last year, and it was the highest ever absolute increase.

MercadoLibre stock has dropped over the past few months as it invests in the kinds of initiatives that management expects to have a long-term positive effect, and profits have declined.

Which is the better growth stock?

Amazon and MercadoLibre are both excellent growth stocks, but in a competition between the two, I vote for MercadoLibre. It's still in its early innings with so many opportunities, and it's doing an excellent job of harnessing them.

It's going through what Amazon went through last year, when the market wasn't pleased with its investments. The market has since changed its tune, and it's likely to re-embrace MercadoLibre too, which is why now is the right time to invest.

Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.