Wall Street is returning to Shopify Inc. (NASDAQ:SHOP). On July 13, Jefferies upgraded the stock from Hold to Buy and raised its target to $160 from $140. Three days earlier, Stifel made the same change and lifted its target to $150 from $110. Both see opportunity after Shopify’s roughly 23% year-to-date decline, but the deeper reversal concerns artificial intelligence: what investors treated as an existential threat is increasingly being viewed as a new distribution channel.
Shopify’s first-quarter results showed little deterioration. Gross merchandise volume increased 35% to $100.74 billion, revenue rose 34% to $3.17 billion, operating income climbed 88%, and free cash flow reached $476 million at a 15% margin. Shares nevertheless fell nearly 16% on May 5 after Shopify forecast high-twenties second-quarter revenue growth, mid-twenties gross-profit growth and operating expenses equal to 35% to 36% of revenue. An expensive stock was punished for deceleration and heavier AI spending despite strong underlying performance.
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The selloff assumed AI could help merchants build stores cheaply while shopping agents bypass websites. That treats Shopify primarily as storefront software. However, commerce still requires structured product data, inventory, payments, fraud protection, taxes, checkout rules and order management. Shopify is positioning itself beneath the interface, where those functions remain necessary whether a purchase begins on a website, or is built with an AI assistant.
Shopify Catalog structures billions of products from millions of merchants for AI discovery. Its Universal Commerce Protocol, co-developed with Google and backed by a broad group of technology and retail companies, provides a common path from product search to checkout. More significantly, Shopify’s free Agentic plan lets businesses using competing platforms place products in its Catalog and transact through Shopify-powered checkout. Shopify can therefore capture payment volume without winning a complete platform migration. If AI weakens storefronts, it could simultaneously enlarge the market for Shopify’s transaction infrastructure.
Early evidence is small but supportive. AI-generated traffic to Shopify stores increased eightfold in the first quarter, orders originating from AI searches grew nearly thirteenfold, and weekly active stores using Sidekick more than quadrupled. Jefferies consequently sees Shopify becoming infrastructure for agentic commerce, capturing additional GMV while embedding itself more deeply in merchant operations.
The quieter catalyst is Shopify’s redesigned partner program. Beginning August 10, partners bringing merchants to Shopify will receive 20% of subscription revenue and 0.1% of eligible online GMV for four years, alongside incentives for selling additional products. The richer early payouts reward agencies for recruiting larger merchants, helping them grow and cross-selling Shopify services. The four-year limit prevents permanent commissions. Shopify is effectively converting its external ecosystem into a performance-based enterprise sales force while preserving better economics after merchants mature.
Jefferies also said third-party data indicates second-quarter GMV is tracking above consensus, supporting a potential earnings beat on August 5, while future price increases could lift 2027 estimates. Stifel sees revenue growth above 30% in 2026 and in the mid-twenties afterward, supported by enterprise, B2B, international expansion, physical retail and payments. Shopify has also expanded its repurchase authorization to $5 billion.
The counterweight is valuation. At approximately $125, Shopify is worth about $163 billion and trades near 13 times trailing revenue and more than 120 times reported earnings. Merchant Solutions carries lower gross margins than subscription software, agentic commerce remains commercially immature, and consumer-facing AI platforms could eventually demand much of its economics.
Wall Street is not returning because Shopify has become cheap. It is returning because the company was priced as replaceable software while evolving into something harder to displace: the product-data, checkout and payment layer connecting merchants to wherever consumers shop next.
While we acknowledge the risk and potential of SHOP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHOP and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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