Shopify stock recently experienced a significant dip, plummeting by 11% despite delivering impressive fourth-quarter results that surpassed Wall Street expectations. The e-commerce titan reported a revenue of $3.67 billion, reflecting a 31% year-over-year increase and beating the analyst consensus of $3.58 billion.
This selloff seems disconnected from Shopify’s actual performance. Instead, the stock fell victim to broader market fears surrounding the potential disruption caused by artificial intelligence (AI) on software companies.
Investor anxiety stems from concerns that brands might harness AI to develop their own storefronts and sell directly through chatbots like Gemini and ChatGPT. This could potentially render middlemen such as Shopify obsolete, or so the narrative suggests.
However, industry analysts argue that these fears are overstated. Shopify operates not merely as a website builder but as a comprehensive platform that efficiently manages payments, logistics, and inventory at competitive prices.
“The market is underappreciating the stickiness of the platform and the value Shopify delivers to merchants,” wrote J.P. Morgan analyst Reginald Smith in a statement. He highlighted Shopify’s AI tools, which are powered by data from millions of merchants and billions of transactions.
Notably, Shopify secured partnerships with major retailers such as Estée Lauder, Starbucks, Coach, and E.l.f. Cosmetics, indicating strong demand for its offerings.
Impressive Growth Metrics
Shopify’s gross merchandise volume (GMV) soared to $123.84 billion in Q4, a 31% increase, with notable strength in Europe where GMV climbed by 45%. Meanwhile, business-to-business (B2B) GMV surged by 84%, and offline GMV rose by 29%. Merchant solutions revenue grew by 35% to $2.9 billion, while subscription revenue also saw a 17% rise to $777 million, as increased customers opted for higher-priced plans.
Additionally, Shopify Payments processed $84 billion in GMV, representing 68% of the total volume—a notable 38% increase, showcasing a four-point gain in penetration rate.
Strong Guidance Ahead
Looking forward, Shopify anticipates low-30 percent revenue growth for Q1 2026, significantly outpacing the analyst expectations of 25.1%. The company also announced a $2 billion stock buyback program.
President Harley Finkelstein expressed confidence, stating that Shopify is in a “pole position” for agentic commerce. Notably, fourth-quarter orders from AI searches skyrocketed fifteen-fold since early 2025, as Shopify expanded its AI platform collaborations.
Analysts Become Bullish
Despite a drop in price targets, analyst sentiment has shifted positively toward Shopify following its earnings report. Almost 70% of analysts now rate the stock as a Buy, up from 59% in late January. The average price target fell to $163.11 from $181.48 at month’s end, yet analysts view this decline as a potential buying opportunity.
Analyst John Shao from TD Cowen upgraded Shopify to Buy from Hold, suggesting that previous valuation levels following similar trends indicated potential rebound paths.
Anthony Chukumba from Loop Capital Markets added that while it might take several quarters for the market to fully recognize that fears regarding AI are exaggerated, investors should brace for volatility in the meantime.
Attractive Valuation Post-Drop
Shopify’s stock is currently trading at 57 times forward earnings following a 30% decline year-to-date, which is significantly lower than its three-year average of 107 times and one-year average of 76 times. With a forward price-to-sales ratio of around 11 times based on 2026 estimates, analysts deem this valuation fair given Shopify’s robust growth trajectory.
Years of investment in AI infrastructure are now paying dividends as agentic commerce begins to flourish. Shopify executives assert that their strategic groundwork positions them favorably against competitors looking to capitalize on this evolving market landscape.
