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Billionaires Are Selling Nvidia Stock and Buying 2 Brilliant Growth Stocks That Have Little to Do With Artificial Intelligence
MELIMercadoLibre(MELI) The Motley Fool·2024-10-02 09:12

Core Viewpoint - The article highlights that while artificial intelligence (AI) has been a dominant investment theme, there are other significant investment opportunities, particularly in e-commerce, as evidenced by hedge fund managers selling shares of Nvidia and purchasing shares of Shopify and MercadoLibre [1][2]. Group 1: Shopify - Shopify offers a comprehensive commerce solution, enabling sellers to manage businesses across various channels, including online marketplaces and social media [3]. - The company holds a strong competitive position, accounting for 10% of retail e-commerce sales in the U.S. and 6% in Western Europe, recognized as a leader in e-commerce and B2B commerce solutions [3]. - Shopify's Q2 revenue increased by 21% to 2billion,withanonGAAPnetincomeriseof852 billion, with a non-GAAP net income rise of 85% to 0.26 per diluted share, driven by strong performance in subscription software and merchant services [4]. - The company estimates its addressable market at 849billion,withsignificantpotentialfromofflineretailandB2Becommerce[4].WallStreetanticipatesShopifysadjustedearningstogrowat26849 billion, with significant potential from offline retail and B2B e-commerce [4]. - Wall Street anticipates Shopify's adjusted earnings to grow at 26% annually through 2027, suggesting a current valuation of 77 times adjusted earnings may appear high, but long-term growth potential remains [5]. Group 2: MercadoLibre - MercadoLibre is the largest online marketplace in Latin America, projected to account for 29% of retail e-commerce sales in the region by 2024, up from 28.3% in 2023 [6]. - The company's ecosystem includes logistics support, ad tech software, payment processing, and lending services, enhancing convenience for merchants [6]. - In Q2, MercadoLibre's revenue surged by 41% to 5 billion, with GAAP earnings increasing by 103% to $10.48 per diluted share, reflecting a net profit margin expansion to 10.5% [7]. - The commerce segment has shown consistent sales acceleration for five consecutive quarters, supported by advertising strength and the MELI+ loyalty program [7]. - Future earnings growth is expected at 45% annually through 2025, making the current valuation of 74 times earnings appear reasonable for patient investors [8].