MercadoLibre slides as AI fears hit $92.4bn stock
MercadoLibre has lost nearly a quarter of its value over the past year as hedge funds exit and investors worry that heavy capital expenditure and artificial intelligence will erode the Latin American e-commerce leader's market position.
MercadoLibre closed at $1,822.65 on July 21, marking a 52-week decline of 24.82% that has dragged its market capitalization down to $92.4 billion. While the shares have gained 8.47% in the past month, the broader trend reflects growing skepticism toward high-growth, capital-intensive platforms amid a market rotation toward artificial intelligence.
City Different Investments detailed this dynamic in its second-quarter investor update. "MercadoLibre, Inc. (NASDAQ:MELI), the leading e-commerce and fintech company in Latin America, also declined. Investors fret over its heavy investment spending and potential disruption from AI, but the business marches on. You can read our assessment of this "MercadoLibre Paradox" in our recent blog post," the firm wrote.
The tension between MercadoLibre's operational momentum and its stock price is evident in shifting institutional positioning. The number of hedge funds holding the stock fell to 102 at the end of the first quarter, down from 113 in the previous quarter. The company has also dropped off the list of the 40 most popular stocks among hedge funds heading into 2026.
This institutional retreat highlights a broader capital reallocation currently punishing non-AI equities. City Different’s own global equity strategies trailed the broader market in the second quarter, despite solid absolute returns. Its Focused Global strategy returned 7.08% and its Global Equity strategy returned 5.36%, but both lagged the MSCI All Country World Index, which surged 14.93% on the back of AI enthusiasm.
Year-to-date, City Different’s strategies are effectively in line with the benchmark, returning 11.28% and 5.29% respectively against the index's 11.25%. However, the second-quarter divergence underscores how aggressively capital is currently favoring AI-linked stocks over traditional e-commerce and fintech growth stories.
