Many individual investors love growth stocks. A rapid rise in revenue, often driven by emerging industries, tends to bolster these shares. Unfortunately, some companies cannot sustain such increases over time, and even the more solid growth stocks experience periodic downturns.
Fortunately, such sell-offs can create buying opportunities in more financially stable companies, and even amid turmoil, these stocks should return to a long-term growth trajectory as they address their challenges. Here are two examples.
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1. Alphabet
Google parent Alphabet (GOOGL 1.47%) (GOOG 1.40%) appeared to be in a recovery mode until its latest earnings report. Gemini successfully showed that the company could compete against OpenAI, and Waymo is emerging as one of the top autonomous driving platforms.
Unfortunately, concerns about the cost of these successes have begun to weigh on the stock. In the report for the fourth quarter of 2025, Alphabet revealed it would spend between $175 billion and $185 billion on capital expenditures (capex) in 2026. This news comes after it spent an additional $91 billion last year.
Admittedly, such figures can sound excessive, even for a wealthy company. However, Alphabet is in a strong position to fund these investments. The Google parent held $127 billion in liquidity at the end of 2025, and it generated $73 billion in free cash flow in the same year. Since free cash flow excludes capex spending, it appears the company holds the necessary capital.
Also, if you think the AI boom is slowing down, Alphabet's earnings say otherwise. In 2025, revenue grew 15% yearly to $403 billion. Additionally, although costs and expenses rose at the same pace, strong performance in its investments helped lead to $132 billion in net income, a 32% annual increase.
NASDAQ: GOOGL
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Furthermore, with the pullback, its 28 P/E ratio is actually below the S&P 500 average of 30. Considering its power to invest in AI and maintain its leadership in that industry, investors should expect Alphabet's stock price growth to resume over time.
2. MercadoLibre
MercadoLibre (MELI 6.77%) is not a household name in the U.S., but American investors might like what they see in this enterprise. It is the leading e-commerce company in Latin America, and like its U.S. counterpart, Amazon, the company has evolved into a conglomerate as it launched successful businesses that bolster its e-commerce operations.
In MercadoLibre's case, it formed Mercado Pago to help the region's cash-based customers buy online and manage money digitally. Moreover, to address regional logistics challenges, it created Mercado Envios to fulfill and deliver orders. Additionally, it leverages its sales platform to sell advertising.
Thanks to those successes, revenue in the first nine months of 2025 rose 37% annually to $20 billion. Nonetheless, rising e-commerce competition and an increase in non-performing loans have weighed on its profits. Consequently, its $1.4 billion in net income grew by only 13% yearly.
NASDAQ: MELI
Key Data Points
Amid those challenges, the stock is flat on the year. Still, its 49 P/E ratio is near multi-year lows, comparable to Amazon's earnings multiple when it was a smaller company.
Furthermore, the company is utilizing loan limits and AI to reduce bad loan losses, and economic growth in Argentina and Venezuela could revive sales levels. Ultimately, such improvements should help boost MercadoLibre stock over time.
