2 Monster Growth Stocks (1 Backed by Nvidia) to Buy Before They Soar 150% and 430%, According to a Wall Street Expert

Key Points

• Philippe Laffont’s Coatue Management curates the Fantastic 40 Growth & Innovation Index, which currently implies substantial upside in Arm and MercadoLibre.

• Arm is an Nvidia-backed semiconductor company with a licensing business model that is gaining traction in data centers as the artificial intelligence boom unfolds.

• MercadoLibre is a Latin American e-commerce company that copied Amazon by building a robust ecosystem of side businesses to support its online marketplace.

• 10 stocks we like better than Arm Holdings ›

Billionaire Philippe Laffont is the founder and portfolio manager at Coatue Management, a hedge fund that outperformed the S&P 500 (SNPINDEX: ^GSPC) by 120 percentage points in the last three years. Coatue curates the Fantastic 40 Growth & Innovation Index, which ranks public and private companies based on growth prospects through 2030.

The index, last updated in June 2025, currently shows buying opportunities in Arm Holdings (NASDAQ: ARM) and MercadoLibre (NASDAQ: MELI), as follows:

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• Coatue says Arm will be worth $787 billion by 2030. That implies 430% upside from its current market value of $148 billion, which equates to annual returns of nearly 40% over the next five years.
• Coatue believes MercadoLibre will be worth $300 billion by 2030. That implies 150% upside from its current market value of $120 billion, which equates to annual returns of 20% over the next five years.

Here's what investors should know about Arm and MercadoLibre.

Image source: Getty Images.

Arm Holdings: An Nvidia-backed semiconductor company

Arm is a British chipmaker that designs central processing unit (CPU) architectures and adjacent technologies like software development tools and compute subsystems. Rather than selling finished chips, Arm licenses its intellectual property to other companies that want to develop custom chips for mobile devices, data centers, and automotive systems.

Arm has long been the chip architecture of choice for smartphones and other mobile devices for its energy efficiency. But that same quality, coupled with the flexibility that its business model affords customers, has led to market share gains in data centers amid the proliferation of artificial intelligence (AI). Over 70,000 enterprises now use Arm server CPUs, a 14-fold increase in just four years.

Nvidia has given the company a particularly strong endorsement: It owns a $178 million stake in Arm, and built its Grace CPU (a core component of its rack-scale systems) on Arm architecture. But Nvidia is not the only technology giant to follow that path. Several major clouds -- including Amazon, Alphabet, and Microsoft-- have designed Arm-based server CPUs for their data centers.

Arm reported mixed results in the June quarter, missing expectations on the top line. Total sales increased 12% to $1 billion on strong growth in royalty revenue offset by a decline in licensing revenue. Operating margin contracted 8 percentage points because of an increase in R&D spending, and non-GAAP net income fell 13% to $0.35 per diluted share.

Wall Street estimates Arm's adjusted earnings will increase at 23% annually through the fiscal year ending in March 2027. That makes the current valuation of 87 times earnings look expensive. Admittedly, Arm beat the consensus earnings estimate by an average of 11% in the last six quarters, but shares would still be pricey even if that continues. Investors can buy a small position here, but I would wait for a cheaper price before buying a big chunk of stock.

MercadoLibre: A Latin American e-commerce giant following the Amazon blueprint

MercadoLibre runs the largest online marketplace in Latin America, a region where e-commerce represents just 15% of total retail sales. Comparatively, more than 30% of total retail happens through digital channels in the U.S. MercadoLibre accounted for about 28% of retail e-commerce sales in Latin America last year and its market share is projected to reach 30% in 2026.

Much like Amazon, the company has solidified its leadership by providing services for logistics, payments, and advertising that pull merchants deeper into its ecosystem. The company has built the "fastest and most extensive delivery network" in Latin America. It owns one of the largest fintech platforms (Mercado Pago) in the region, and is expected to be the fastest growing ad tech company in the world in 2025.

MercadoLibre reported reasonably good financial results in the second quarter, despite missing the consensus estimate on the bottom line. Total revenue increased 34% to $6.8 billion, representing 29% growth in the commerce segment and 40% growth in the fintech segment. GAAP net income fell 2% to $523 million, but that was due to foreign currency fluctuations and investments in the business that should drive future growth.

Wall Street expects MercadoLibre's earnings to increase at 32% annually over the next three years. That makes the current valuation of 58 times earnings look reasonable. The stock has historically been volatile, dropping more than 20% from a record high two times in the last year, because of somewhat challenging macroeconomic conditions in Latin America. But investors comfortable with price swings should buy a position today.

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Trevor Jennewine has positions in Amazon, MercadoLibre, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, MercadoLibre, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.