Key Takeaways
- Shopify’s second-quarter profit and revenue beat estimates, driving its stock higher.
- The stock remains down after investors rotated out of software earlier this year, analysts say.
- Shopify’s fundamentals remain strong, and some analysts say a recovery may be ahead.
Canadian e-commerce giant Shopify SHOP delivered stronger-than-expected second-quarter results on Wednesday, relieving concerns about competition from artificial intelligence, which had led to the stock’s price being cut in half. The company reported a 34% jump in revenue to USD 3.58 billion and more than 30% growth in gross merchandise volume. The online retailer also raised the bar for the next quarter, forecasting revenue growth in the low 30% range, up from the high 20% range forecast for the second quarter.
The stock rose 16.5% following its Aug. 5 earnings release, trading at C$201.97 at market close, but it’s still down about 9.0% so far in 2026.
“Overall trends are generally comparable to the last several quarters in terms of gross merchandise volume performance, which was strong,” says Morningstar equity analyst Dan Romanoff, who covers the stock. “Management noted that while it is still early, the company is seeing strong growth in agentic commerce even as traditional search remains robust.” He raised the stock’s fair value estimate to C$204 per share from C$163 following the report.
The upbeat results offer a welcome boost to a stock that has sharply underperformed even as the broader market posted double-digit gains. After soaring 44.5% in 2025 to a high of C$253.10, the stock collapsed by nearly 50% to a low of C$129.01 in mid-May. With Wednesday’s rally, the stock is still down over 20% from that high and down nearly 9% over the year to date. That contrasts with a 13.0% gain in the Morningstar Canada Index and the S&P/TSX Composite Index’s 12.9% rise.
Before Wednesday’s surge, Shopify’s shares had been the single biggest drag on the Morningstar Canada Index this year. As the third-largest stock in the index with a 4.4% weighting, it detracted 1.3 percentage points (nearly 10.0%) from the index’s 2026 14.6-percentage-point return this year as of Aug. 4.
Key Morningstar Metrics for Shopify
- Fair Value Estimate: C$204.00
- Morningstar Rating: ★★★
- Economic Moat: Narrow
- Sector: Technology
Shopify Battered by Software Selloff
Underlying Shopify’s underperformance has been the broader artificial intelligence disruption theme that hit software stocks across the board, according to Morningstar’s Romanoff.
“It’s been much more about software [industry] weakness than anything related specifically to Shopify’s financial performance,” he says. “Software has been obliterated since around the fall of 2025.”
Agentic AI Disrupts e-Commerce
Concerns spiked as investors began pricing in the disruptive power of agentic commerce—AI agents buying and selling products without a consumer going to the seller’s website—and how it could undermine Shopify’s business model. “There was the scare that agentic commerce would weaken Shopify’s position,” says Morningstar’s Romanoff.
Shopify has tried to allay some of those fears, as it “partnered with Google, which seems formidable on the surface, but it’s all new and evolving quickly,” Romanoff says. In an Aug. 5 analyst note, he writes: “We think Shopify should be more insulated because only about 20% of revenue is actually from software.”
In a major strategic shift, the company has been pushing to integrate AI into its existing suite. Following the second-quarter earnings report, “Early indications are that agentic commerce will help Shopify,” Romanoff says.
Morgan Stanley research analyst Adam Wood says in a note that the quarter reinforces his thesis that “Shopify is a best-athlete commerce platform using AI to accelerate, rather than impair, its flywheel.”
In a July 7 note to investors, Bank of America securities research analyst Tal Liani wrote that agentic AI fears around the stock stemmed from a misunderstanding: “Shopify could be a core beneficiary of the shift toward AI-driven, agentic commerce rather than being disintermediated by it. We see Shopify’s backend infrastructure, such as checkout and payments, as increasingly central to AI-native transactions, potentially supporting future revenue growth.”
Momentum Rebuilds for e-Commerce and Shopify
Romanoff says the sector-wide downtrend in software stocks is easing. In the last few days, Shopify has made significant gains “as the AI supply trade buckles [and] software starts to claw its way back.” He thinks Shopify’s fundamentals and secular e-commerce trend remain strong enough to support the stock’s recovery ahead. But that’s predicated on the company delivering on expectations, the chances of which “have increased as a result of this morning’s report.”
Romanoff assigns Shopify a narrow
“Shopify is well positioned for the secular [e-commerce] theme, including if agentic commerce truly gains traction over the next several years,” says Romanoff.
In a note following Shopify’s report, BMO Capital Markets technology analyst Thanos Moschopoulos says, “we believe valuation remains attractive given the durability of SHOP’s growth, which is supported by a broad slate of growth [opportunities].”
Bank of America’s Liani sees opportunities for Shopify in “international expansion and enterprise penetration.”
