BABA, MELI, NU Gain Tailwinds From Dollar Weakness

No investor should underestimate the power of intermarket connections.

Investors often focus on single markets in isolation, but the real story is in the connections between them. Stocks, bonds, commodities, and currencies don’t move on their own; they respond to the same underlying shifts in money flows and sentiment.

Right now, the weakening U.S. dollar is not just a currency move, but an indicator of mounting inflation pressure, shifting global purchasing power, and capital flowing across borders. That dynamic favors international companies, since profits earned abroad convert into more dollars once they return stateside, giving investors an automatic boost even if the businesses themselves don’t change.

We’re already seeing it in emerging market companies like Alibaba Group NYSE: BABA, MercadoLibre Inc. NASDAQ: MELI, and Nu Holdings Ltd. NYSE: NU. All three have outperformed this year, and with the dollar still falling, the rally may only be getting started.

Alibaba: Poised for Further Growth

For years, legendary investors David Tepper and Michael Burry have been bullish on Alibaba. But, until recently, the stock struggled to deliver. Now up 93% year-to-date (YTD) and near a new 52-week high, Alibaba is finally gaining momentum, driven in part by macro tailwinds like a weaker dollar.

As China’s exports to Europe continue to increase, a stronger euro works in Alibaba’s favor. This is especially evident through platforms like AliExpress, where European consumers gain more spending power. It’s true that currency shifts play a role in Alibaba’s valuation, but the company’s core fundamentals remain solid even underneath the noise.

The truth is that Alibaba isn’t just an e-commerce story anymore. The company is pushing into semiconductor development, putting it in direct competition with NVIDIA Co. NASDAQ: NVDA. The company’s new AI chip design has already sparked investor interest, sending ripple effects through the market and even pressuring NVIDIA stock. This shift positions the company within the technology sector, a high-growth space that can compound the stock’s momentum.

Even after its sharp rally, Alibaba still trades well below its all-time high of over $310. With renewed investor interest and multiple growth catalysts, the stock has room to run.

MercadoLibre: Gains from Latin America’s Currency Strength

Policy reforms in Brazil and Argentina are boosting local economies, increasing consumer spending, and speeding up e-commerce adoption. When you add in a weaker dollar, all of a sudden shoppers across Latin America are able to spend more. And MercadoLibre is ready well-positied to take advantage of this.

The stock is current trading at about 94% of its 52-week high, which means investors are already noticing. Notably, institutional investors have started boosting their positions, highlighting the growing conviction among smart money that this company has more room to run. Ameriprise Financial, for example, recently increased its stake in MercadoLibre by 3.6%, bringing its position to $709.5 million. 

Nu Holdings: LATAM’s Next Financial Frontier

The United States’ success in fintech has served as a blueprint, and Nu Holdings is executing it exceptionally well in emerging markets.

The company offers tech-driven banking solutions to a fast-growing middle class through its part traditional bank, part fintech model. This hybird approach makes it uniquely positioned to capture regional growth, and why this company is quickly becoming a financial leader in Brazil. 

What’s fueling the bullish price action? One reason is that Nu’s earnings denominated in the Brazilian real, which is now strengthening against the dollar. Nu could outperform Wall Street expectations, fueling bullish price action. At a $77 billion market cap, it still has meaningful upside compared to peers like Robinhood Markets Inc. NASDAQ: HOOD, which once topped $107.7 billion. Because of this, many think that Nu could actually exceed Wall Street expections.

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