MercadoLibre (MELI) may face several quarters of investor skepticism as it spends more to defend its share in Brazil, absorbs logistics and free shipping costs, and manages sector-wide risks tied to artificial intelligence, Wedbush said in a note Tuesday.

Q4 profitability estimates for the company are now lower amid free shipping in Brazil for lower-priced products, additional logistics investments and elevated sales and marketing spending, the investment firm said.

The firm said, despite revisions, it anticipate the company's investments

to drive more sustainable growth, and sees the current risk/reward as attractive.

Wedbush also said it is focused on the demand trends and competition, 2026 expense discipline, and management's ability to scale the loan book and deepen credit products penetration while managing risk.

Wedbush said its Q4 estimates are relatively line with consensus. The company is expected to announce its Q4 results on Feb. 24.

The firm kept its outperform rating for MercadoLibre and lowered its price target to $2,600 from $2,700.

Price: 1972.17, Change: -16.09, Percent Change: -0.81