TLDR
- Shopify stock fell 11% after Q4 earnings despite revenue surging 31% year-over-year to $3.67 billion, beating analyst expectations
- Company guided for low-30s revenue growth in Q1 2026, well above the 25.1% analysts predicted, and announced a $2 billion stock buyback
- Nearly 70% of analysts now rate Shopify a Buy, up from 59% in late January, though average price target dropped from $181.48 to $163.11
- AI-powered orders jumped 15-fold since January 2025 as Shopify expanded partnerships with Gemini and ChatGPT for agentic commerce
- Stock trades at 57 times forward earnings after 30% year-to-date decline, down from three-year average of 107 times but analysts see recovery ahead
Shopify stock took a beating this week, dropping as much as 11% despite posting impressive fourth-quarter results that beat Wall Street expectations. The e-commerce platform reported revenue of $3.67 billion, up 31% from a year ago and ahead of the $3.58 billion analyst consensus.
The selloff had nothing to do with Shopify’s performance. Instead, the stock got caught in a broader market panic about AI’s potential to disrupt software companies.
Investors are worried that brands will use AI to build their own storefronts and sell directly through chatbots like Gemini and ChatGPT. That could make middlemen like Shopify unnecessary, or so the thinking goes.
But analysts say those fears are overblown. Shopify isn’t just a website builder. It’s an end-to-end platform that handles payments, logistics, and inventory management at competitive prices.
“The market is underappreciating the stickiness of the platform and value Shopify delivers to merchants,” wrote J.P. Morgan analyst Reginald Smith in a Thursday note. He pointed to Shopify’s AI tools trained on data from millions of merchants and billions of transactions.
This quarter alone, Shopify signed deals with major retailers including Estée Lauder, Starbucks, Coach, and E.l.f. Cosmetics. That suggests demand for its services remains strong.
Record Growth Across Key Metrics
Gross merchandise volume on Shopify’s platform jumped 31% to $123.84 billion in Q4. Europe showed particular strength, with GMV climbing 45%, or 35% in constant currencies.
B2B GMV surged 84% while offline GMV grew 29%. Merchant solutions revenue increased 35% to $2.9 billion.
Subscription revenue rose 17% to $777 million as customers upgraded to higher-priced plans. Monthly recurring revenue hit $205 million, up 15%.
Shopify Payments processed $84 billion in GMV, representing 68% of total volume and a 38% increase. That’s a four-point gain in penetration rate.
Management Issues Strong Guidance
For Q1 2026, Shopify expects revenue to grow in the low-30s percentage range. That crushed analyst estimates of 25.1% growth.
The company also authorized a $2 billion stock buyback program.
President Harley Finkelstein said Shopify is in “pole position” for agentic commerce. Fourth-quarter orders from AI searches jumped 15-fold since January 2025 as the company expanded its AI platform partnerships.
Analyst Sentiment Shifts Bullish
Despite lowering price targets, analysts grew more bullish on Shopify after earnings. Nearly 70% now rate the stock a Buy, up from 59% in late January according to FactSet.
The average price target fell to $163.11 from $181.48 at the end of January. But analysts view the drop as a buying opportunity.
TD Cowen’s John Shao upgraded Shopify to Buy from Hold on Friday. He noted that similar valuation levels in the past were followed by rebounds.
Loop Capital Markets analyst Anthony Chukumba said it may take several quarters for the market to realize AI fears are exaggerated. Until then, expect volatility.
Valuation Looks Attractive After Selloff
After its 30% year-to-date decline, Shopify trades at 57 times forward earnings. That’s well below its three-year average of 107 times and one-year average of 76 times.
The stock’s forward price-to-sales ratio sits around 11 times based on 2026 estimates. Given its growth rate, analysts consider that fair value.
The company has been building AI infrastructure for years. Those efforts are starting to pay off as agentic commerce takes shape. Shopify executives say the groundwork they laid positions them ahead of competitors.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
