Investing Experts Live: Beth Kindig and Andres Cardenal's top growth picks for 2026

0:09Andres Cardenal:Welcome back, everyone, to Investing Experts Live. Top ideas for 2026. Obviously, if you were tuning in to the first session today with Rina, Steven, and Samuel, you got a deep dive into the world of yield and some great ideas from both of them. Now we're transitioning here to the exciting growth story of AI and data and growth focus for the remainder of the session in today's event. And we're going to be joined by Andre Cardinal and Beth Kendig. You may know them from the Data Driven Investor and Tech Insider Network. But before we dive into conversation, stick with me for one second. We just need to get a quick legal disclaimer out of the way for you.

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1:23Andres Cardenal:Seeking Alpha is not a licensed securities dealer, broker, U.S. investment advisor, or investment bank. All right. Now, with that out of the way, I'm excited to dive in with Andre and Beth and present you all with their top idea for the year. So kicking things off here, Beth, I would love to start things off. People know you. They know Tech Insider Network. You've been writing for many, many years about the AI boom and technology and the winners, and you have had great performance. But obviously, AI. Are we overvalued? Where do we go from here? Is the energy constraint too much? What is going to happen with geopolitical tensions here in the world of AI?

2:01Andres Cardenal:Whose model is going to win? Any thoughts on just a macroeconomic scale to start leveling the playing field here today? Thanks, Daniel. There are so many questions to answer when it comes to AI, and those are really great questions to ask. I think the big picture remains what's being spent, is there demand? And today you're going to hear more from me on that topic, which is where are the supply constraints? Wherever there is a supply constraint, there is an opportunity for an investor, is my opinion. We do have a macro person on our team. And as we look through 2026, clearly macro will never cooperate on a year-long outlook.

2:39Andres Cardenal:It changes very frequently. But we do actually believe that we could see a correction in AI stocks, which is one reason why we have a cash allocation right now. We love buying lower. We have no problem with AI stocks selling off and buying them lower, meaning the long term trend is completely intact here. And for me, it's a buy on dips. And even with a correction, for me, the bigger picture is the outsized demand. That's exactly what you want to see. You want to avoid markets where there's an oversupply. That's the opposite of what I'm seeing in AI right now. All right. Now over to you, Andre.

3:21Andres Cardenal:I want to ask you, so you're the data-driven investor, as many of us are aware. And there's been a lot of geopolitical tensions so far already this year. and last year, everybody's looking at Venezuela. They're looking at what's still going on in Ukraine. They're looking all across the board with Greenland and trade wars and trade deals and so many various factors going on at this moment in time. So what is the data showing you? Are those the big worries for this year or are you kind of focused on something else?

3:48Beth Kindig:Hello, Daniel. Thank you very much for having me. Yeah, I agree with what Beth said. I think we're in a powerful bull market, a long-term bull market. and when I look at inflation rates when I look at economic activity when I look at profit margins the economy is kind of cooperating very well that notwithstanding you know the main problem in the market is often the lack of fear so if the bull market continues which I think it will it's going to have some sharp corrections along the way and the biggest risk factor for this environment I think is what you just mentioned the situation in Iran is tragic I mean In China, we're also seeing some uncertainty regarding military leadership.

4:34Beth Kindig:So this is an area that can create lots of concerns. Generally speaking, it is low probability risk that military conflicts will escalate. But it is, in my mind, the most concerning factor because the economy is going to do well this year. So I think that geopolitical risk is the main risk factor that we need to watch very closely.

4:57Andres Cardenal:All right. Here, Andre, we're going to come back to you. I would love for you to go ahead and present your top idea for 2026. Of course.

5:06Beth Kindig:So my best idea for 2026 is Mercado Libre. This means free market in Spanish. The company is the market leader in e-commerce and fintech in Latin America. It also has the strongest distribution network, the biggest logistics network in the region. MercadoLibre is a very high quality business. The business is protected by multiple sources of competitive mode. Meaning first and foremost, the logistics network is unparalleled. You can basically get products from MercadoLibre delivered in some corners of the Amazonian jungle or in the top of a mountain in Chile or in Argentina. in addition to this it has the network effect meaning that buyers and sellers attract each other to the platform so if you're a merchant you you want to go where the public is and if you're buying something you want to go where the supply is the same happens in fintech i mean if you have a digital wallet you want this digital wallet to be accepted everywhere and merchants need to accept the payment platforms that bring more customers to the store so the bigger the company the stronger the product and the more value it creates for users this builds a self-sustaining virtuous cycle for the company and it has the brand i mean um mercadolibre is the most recognized the most valuable brand in latin america according to cantar and when you buy something on mercadolibre you know that you can expect delivery to happen on time you know then you can pay safely which is very very important in latin america and you know that if there is anything wrong with the product, quality and so forth, Mercado Libre takes care of the returns.

6:41Beth Kindig:So this reduces friction, this creates trust and makes Mercado Libre a unique company in this sector. The business is growing at full speed, record-breaking speed in fact, and it has enormous room for long-term growth. When we think about e-commerce, we think about fintech in the United States, you know, those are competitive industries and I mean, they still have a lot of room for growth, but in Latin America, market penetrations are much lower, which means years and even decades of growth for Mercado Libre ahead. And because margins are contracting, margins are contracting for very good reasons, in my opinion, the stock is currently trading at historically attractive valuation levels.

7:26Beth Kindig:So let's begin with top line growth. MercadoLibre is the only public listed company in the world among more than 83 ,000 companies that has delivered revenue growth above 30 % for more than 27 consecutive quarters. We can see the numbers in this slide and you can see that the 39 % increase in the most recent quarter, the third quarter of 2025, is an acceleration versus private quarters, 35, 37,

8:00Beth Kindig:Now, swimming in to some recent indicators. Revenue growing at 39 % in US dollars, 49 % in constant currencies, GMB expanding at 28%, which is 35 % in constant currencies. items sold increased 39 % and TPV in fintech increasing at 41 % in US dollars and 54 % in constant currencies. The size of the credit portfolio expanded by 83 % versus the same quarter in the prior year reaching 11 million. Looking at some key indicators. So unique buyers in e-commerce is the oldest the most mature metric for Mecao Libre because the company started as an e-commerce platform and then it built the fintech business well it grew the user base by 26 percent this is an acceleration versus headquarters you can see 21 24 25 25 and now 26 it has 76.8 million customers so if it were a country mercado libre would be bigger than all of the individual countries in latin america except for mexico and brazil which are the two biggest countries.

9:21Beth Kindig:Fintech platform growing at 29 % and reaching 72.2 million users. Then again, because revenue is going very rapidly, TPV is increasing 41 % in fintech. So we know that the monetization of this user base in fintech is absolutely exploding. Assets under management increased 89%, reaching 15 billion. And the size of the great portfolio grew 83 % during the quarter, reaching 11 billion. So, the company is doing outstandingly well on the top line. Bad news for short-term focused investors is that profit margins have been contracting recently. The operating profit margin is down from 10.5 % in the third quarter of 2024 to 9.8 in the third quarter of 2025.

10:17Beth Kindig:And net income margin is down from 7.5 % to 5.7%. Now, this is a crucial clarification in investment thesis. Why are margins contracting? Because management is doing the right thing by investing for sustained long-term growth as opposed to focusing too much on margins in a particular quarter. here are some of the initiatives that America Bolivia is taking this is why margins are contracting and this is why the company is growing so rapidly in Brazil for example the company reduced the pre-shipping threshold from 79 reais to 19 reais this obviously has a negative impact on margins short term but how is the top line responding to this unique buyers in Brazil had the biggest increase ever in absolute terms even faster than during the pandemic Sold items grew 42%, and GMB increased 34 % in currency natural basis.

11:16Beth Kindig:Customers are happy at an error, market share gains, and record customer satisfaction in Brazil. Now, this is also very important. Because of higher utilization of per capacity, shipping costs per unit in Brazil declined by 8%, which is a massive decline. the bigger the the size of the logistics network the higher the occupation the more efficiency it has the lower the cost per unit which consolidates the competitive advantage around the business also in fintech there was an increase in funding cost in in the third quarter of 2025 in argentina because argentina had its midterms elections and there was a lot of currency volatility in anticipation of those elections so the government had to increase the interest rates very sharply to contain this volatility what then happened was that the incumbent party Javier Millet's La Libertad Avanza party won the elections so the the currency markets are now stable in Argentina and interest rates are declining so a large part of this increase was temporary it's already in the past also the companies are aggressively expanding the credit portfolio like we saw in in Paris, like 83%.

12:34Beth Kindig:And for accounting reasons, when you issue, for example, a new credit card, the company needs to provision the back debt upfront and then invest the money with the interest payments. So margins decline because you issue a lot of credit cards and those credit cards, you need to record the expenses first and then you record the profits. Now, why is MercadoLibre expanding so rapidly the size of the great portfolio? because they are already seeing that in Brazil, which is the oldest country, the oldest market in trade, the most mature market, cohorts, the older cohorts, are exceedingly profitable, more profitable than they expected.

13:12Beth Kindig:So they see, okay, this is working. We're putting new money after good money. We know that this business is being profitable. We're underwriting the trade in the right way. In Mexico, for example, which is a huge market, trade is enormously underpenetrated. So there is a massive, massive opportunity to democratize financial services in countries such as Mexico, Argentina, which have very low credit penetration. So the point is that late interest margins fluctuate in specific quarters, depending on how much credit the company is giving, because they need to provision for expenses up front. But structurally speaking, we're looking at mature cohorts.

13:52Beth Kindig:The business is going to be very profitable. Importantly, because MercadoLibre has access to enormously valuable data about consumer spending and business sales. Again, about the credit flywheel, because, you know, Wall Street, after the 2008 crisis, Wall Street analysts tend to be concerned when they see a rapid expansion in a credit portfolio. But this credit business is not only a strong source of profitability for the company, but also a key strategic asset. For example, two out of three entrepreneurs that made their first investment ever via Mercado Pago, and 60 % of the ones who received credit had their first credit ever from the company.

14:35Beth Kindig:So these are customers which the traditional banks cannot serve. So if you are a merchant in Brazil, you have a growing business, and you get your first credit from Mercado Libre, there is a big chance that you are going to be a customer of the company forever. because you're going to be a customer in investments, in all kinds of great products, in e-commerce, of course, in insurance. I mean, there's a lot of cross-line opportunities. And Mercado Libre in Fentech has an enormous advantage versus the traditional banks. For example, if you have a legacy bank in Brazil, or in any country, Latin America, for that matter, for example, how do you gain new customers?

15:15Beth Kindig:Well, you need to have branches, physical branches. You need to have lots of employees, a lot of paperwork. you need to do a lot of advertising. For MercadoLibre, instead, it's very simple. You have someone who uses your app every day. Basically, in many countries in Latin America, you use the app every day. And you know that this person is a good credit. So you offer this person a credit card via the app. It's still expensive. And if you have the consumer, you say, okay, I pay zero to get this credit card, and I get to postpone my expenditures, I get discounts, I get payments in storements without interest rates, which is quite important in countries where inflation is higher and interest rate is also higher.

15:58Beth Kindig:So the company can serve segments of the population that a big bank cannot serve because a big bank has very high customer acquisition costs. American Libre has almost zero customer acquisition costs in the credit business. Credit quality is as strong as ever, claim brewing. And again, this decision to provide more free shipping in Brazil. It is not only working very well and driving accelerating growth in the company's oldest and most mature market. It is strengthening the size of the moat. in Latin America in many cases you do not have alternative logistics network that can provide anything similar to what MercadoLibre has in some cases you have some small private carriers and sometimes you will need to rely on government owned carriers which are you know not reliable at all so this decision to provide more for customers to make customers happier it's not only accelerating growth but it's only building a stronger business for the long term which is exactly what the company needs to do at this stage and it also has a huge um opportunity in advertising because my god is right at the point where you make the purchase decisions uh advertising is a very high margin business just getting started uh growing at 63 in the most recent quarter and uh i mean we talk a lot about AI companies, and I'm very bullish on many of the AI infrastructure companies, but we should not forget about companies in Mercado Libre, which are AI implementation companies.

17:45Beth Kindig:These are companies that are going to be distributing AI into a lot of businesses. In logistics, it's going to be much more efficient because of AI. Well, this is to say, software building, I mean, coding is going to be much more efficient, and it's a big expense for the company. And advertising. MercadoLibre is just getting started in the advertising business. And AI applications to advertising are going to drive massive growth because MercadoLibre is right at the point where you make the purchase decision. Let alone, for example, shopping agents. I mean, the company has not announced anything yet, but we have seen Amazon and Shopify are already moving into buying agents.

18:27Beth Kindig:and I think it's only a matter of time until we see something similar from Mercado Libre and it's going to drive a lot of customer attention, in my opinion. Now, the big picture. E-commerce in Latin America is only 15 % of retail sales. In the United States, it's 30 % and in China, it's almost 40%. And it's not only much bigger in other countries, but it's still growing. So it's unavoidable. Over time, e-commerce is going to double its penetration as a share of retail sales in Latin America, and it's going to continue growing from there. It will not stop at 30. So this is why I am pretty sure that management is doing exactly what it needs to do, to make sure that Mercado Libre remains the undisputed leader in this huge opportunity.

19:16Beth Kindig:Look, for example, at FinTech. In Mexico, only 11 % of the population has a credit card. Less than 50 % of the population has a bank account. and I live in Argentina I can tell you from a boots on the ground perspective a lot of people here they don't have formal jobs or they don't have a high salary they don't have bank accounts but they have an account on Mercado Libre because they need a Mercado Pago they need to get the money transferred it's much safer instead of paying something with cash in neighborhoods which are dangerous you can pay with your phone and you don't need to take so much risk so a lot of segments of the population especially young segments of the population, are getting their first ever access to financial services via Mercado Pago.

20:03Beth Kindig:And again, these customers are going to be customers of the company for life. So the room to monetize this customer base is gigantic in credit, in investment products, in advertising, in e-commerce, in insurance, just getting started, looking at valuation. As we know, if the business fundamentals are doing well, the stock price follows in the same direction. However, this relationship is not always straightforward, right? For example, during the pandemic, interest rates were at zero, growth was accelerated, and the stock price outperformed the fundamentals. More recently, however, fundamentals are doing better than ever, but the stock price has pulled back because of this compression in profit margins, this expansion into credit, which is generating some concerns among investors.

20:50Beth Kindig:In terms of enterprise value to revenue, the stock is trading at around 4, when it used to trade at more than double this valuation. And again, sure, you can say, well, but growth is going to slow down, so it deserves to trade at this kind of valuation. Well, let me tell you, sure, you can expect growth to slow down eventually, but it has not slowed down much in recent quarters. and from a competitive point of view in terms of business quality Mercado Libre is stronger than ever and if we look at price to free cash flow price to operating cash flow the stock trades at less than 16 times free cash flow which is in my opinion too cheap for a business of this quality less than 14 times operating cash flow with a company such as Mercado Libre you always need to be careful when you look at the cash flows because it loans money and it lends money so perhaps in a specific quarter you can have some exceptional fluctuations in cash flows.

21:47Beth Kindig:However, when I look at the past 12 months, you have a free cash flow margin of around 24%, which is quite conservative, in my opinion, in terms of measuring a sustainable cash flow generation. I think that free cash flow margin for Mercalli is going to be above 25 in the future. So current cash flows, in my opinion, represent a good fundamental metric for the company. I think it's exceptionally cheap at current prices. Sum it up, MercadoLibre is a generational compounder with enormous room for sustainable growth in Latin America because it's the market leader with strong modes in markets which are deeply underpenetrated.

22:28Beth Kindig:High quality business with, I have to say, the best management team in Latin America by far, far distance. And the stock is historically underbaked because the market is concerned about short term margin pressure. However, management is doing the right thing by focusing on long-term value creation instead of focusing too much on short-term profit margins. And this short-term uncertainty affecting the stock is a source of long-term opportunity for investors in Mercado.

22:56Andres Cardenal:All right, Andres. Thank you so much for that great presentation. I will say, I see people in the chat here already saying that they're buying into what you're selling. Great thesis. Great rundown of the metrics. Beth, we'd love for you to take the chair now and go ahead and share what's your big idea for the year. Hi, I'm Beth. I'm with Tech Insider Network. I wanted to take a minute to introduce myself to anyone hearing from me for the first time. Through a series of strong AI calls, getting into AI early, my team has achieved a 210 % five-year cumulative. That would place us as number two in the country if we were a hedge fund and number five if we were an ETF.

23:36Andres Cardenal:Among those calls was in 2018, 2019, when I stated NVIDIA would become the world's most valuable company. That returned 40x for our premium members. We had 45 % allocation in AI going into 2023, by January 1st of 2023. Today, we have a 98 % allocation to AI. So for those of you who have followed me, it's probably no surprise that I plan to talk about AI today. But first, what I would love to talk about, what I'll do is I'll first dispel if we are in an AI bubble. I think we need to address the elephant in the room. And then we will go into a problem. And I want to really fully describe this problem because if you don't understand the problem, it's really hard to see what the solution is going to be.

24:29Andres Cardenal:And for me, I've always identified the problem first. On our paywall, I go into long, deep dives around the problems that these tech companies are solving. Because if you solve a pain point, your demand curve is much steeper and at a better trajectory than those who are just solving conveniences. But let's start with the AI bubble. Are we in an AI bubble? There are a few questions, whether it's AI or another area of tech or even another sector, whatever it might be, to ask when the word bubble is being thrown around. One of them is who is investing in the trend? In the dot-com, it was a lot of venture capitalists.

25:09Andres Cardenal:It was a lot of IPOs, a lot of pre-revenue. In AI, it's the world's most cash-efficient companies, the most profitable companies in the world. Very different. That contrast could not be starker. Who is making the money. Again, let's go back to these bubbles. A lot of dot-com companies were pre-revenue, or they only had$10 to$20 million in revenue. What you may hear is that AI is not monetizing. That is not true. That is factually inaccurate. Meta has its ad engine called Advantage Plus. It is now on a$60 billion annual run rate within two to three years. That is faster than social media and faster than mobile in terms of contribution to Meadows revenue.

25:56Andres Cardenal:They have seen the fastest run rate in their history from AI. OpenAI is another example of a company in the private markets that is now at a$20 billion annual run rate. That is the fastest we have ever seen in the tech industry. Azure, 50 % from AI. And here's the interesting part, and that's not the topic of this conversation, but we are only in the training phase. We are going to go into the monetization phase soon, and we're already seeing really strong signals of how this technology will monetize. What this presentation will focus on is the third part of whether or not a trend is in a bubble or quite the opposite, is a trend investable, which really is those supply constraints.

26:43Andres Cardenal:The one thing about the dot-com that really does characterize a bubble is the oversupply. There were lots of e-commerce sites, more internet sites, websites than you could imagine or need or want. It was an oversupply, very low barriers to entry, quite the opposite with AI. This is extremely supply constrained, whether it's compute, memory, networking, advanced packaging, all of the above is supply constraint. That is the number one way I would know as a tech analyst for 15 years, if something is in a bubble or not. Now, of those that I just described, which is really the AI stack, I'm actually going to go in a different direction with you today.

27:30Andres Cardenal:And I'm going to talk about a constraint that is so large and so bottlenecked that I can guarantee it did not exist during the PC era. It did not exist in the mobile era. It did not exist in the internet era. And that trend is AI energy. Now, energy has been around for decades, maybe even a century, but it's really the importance of energy that is shifting. And that is what AI energy represents. I'm not talking your kind of your boring old energy sector here. And we have NVIDIA to thank for that transformative moment for AI energy. The clock is really ticking primarily because of how NVIDIA is releasing its GPUs.

28:24Andres Cardenal:Right now, these systems are around 120 kilowatts to 140 kilowatts. Within the next one to two years, we will be hitting 600 kilowatts. Let's go back to historically. Historically, NVIDIA was shipping under 10 kilowatt systems. And so we're rapidly growing the power requirements of these rack scale systems. And the clock is ticking because as you can see on the far right, there's a very large bar there in terms of power consumption. And it really does hit right around the time that Rubin Ultra arrives. So ultimately, NVIDIA is changing the game to where AI is no longer compute constrained. Instead, the AI race is a power race.

29:20Andres Cardenal:It doesn't matter how much you spend on big tech CapEx. It doesn't matter how many AI systems you can now acquire because those supply constraints have eased. What matters is can you power those up? Therefore, I believe big tech in the next one to three years will do everything in its power to secure everything it possibly can to secure that power. And the key part of that is that big tech will need to do it quickly. If we look at global AI data center power demand, their estimates are everywhere, kind of all over the place right now. This is an extremely conservative estimate from Boston Consulting Group.

30:03Andres Cardenal:They're estimating 55 % growth over the next three years. The United States has seen 0 % growth. We have had flat energy consumption for 20 years. The global demand has grown 80 % over the last 20 years. However, what's really interesting about this problem is that it will be undeniably led by the United States. The amount of energy that we need has to be in the United States because we are the AI leader. Now, if you break down the 55 % growth rate and you drill in deeper, it's kind of tiny letters down there. It's in green and yellow. We're going to get into 100 % plus CAGR on energy for inference.

30:54Andres Cardenal:We will remain at a 30 % CAGR for training. Again, I'm just going to go back to 30 % CAGR energy growth on training, over 100 % CAGR growth on inference from a country that did not grow energy consumption for the last 20 years. So how are we going to do that? Well, the electrical grid is one thing that often comes to mind. The problem is that the electrical grid is very stretched. This is the PJM auction pricing. It surged 11x for the next two years. The 2025-2026 auction, pricing skyrocketed over 800%. The 2026-2027 auction saw another 22 % increase. The realized peak load for the electrical grid is hitting 160 gigawatts two years earlier than originally forecast.