Will AI kill Shopify?

In a Jan. 26 note, RBC Dominion Securities analyst Paul Treiber reiterated an “Outperform” rating on Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP) and maintained a US$200 price target, saying the company is positioned to deliver another solid quarter and could again exceed Street expectations.

“While we believe that the pullback in software valuations is an overreaction, as we believe software will evolve to incorporate, rather than be disrupted by, new AI innovations, we are lowering our price targets to reflect higher risk premiums on software and reduced peer valuations…”

Treiber said Shopify is likely to report strong fourth-quarter results, with potential upside to consensus estimates similar to what the company has delivered in recent quarters. While he acknowledged that the first quarter is typically seasonally soft, he said current consensus estimates appear overly conservative and guidance could come in ahead of expectations. Given Shopify’s growth momentum and investor enthusiasm around its AI-driven product innovations, Treiber said the shares are likely to continue trading near the high end of their three-year historical valuation range.

As reported by the Globe and Mail, the analyst added that recent weakness across the software sector reflects sentiment rather than fundamentals.

“While we believe that the pullback in software valuations is an overreaction, as we believe software will evolve to incorporate, rather than be disrupted by, new AI innovations, we are lowering our price targets to reflect higher risk premiums on software and reduced peer valuations,” Treiber said.

He noted that Canadian software stocks, in particular, have seen valuation multiples compress amid AI disruption concerns, and that negative sentiment could persist in the near term.

Shopify shares fell 4.2% in Toronto on Jan. 21, underperforming a broader rebound in Canada’s main equity index as tariff-related concerns linked to Greenland eased. Despite the pullback, Treiber said third-party data continue to point to strong fourth-quarter momentum and ongoing market share gains, with earnings scheduled for Feb. 18.

RBC said Shopify is currently trading at a price-to-earnings multiple of about 115, which it views as justified given the company’s growth profile, expanding merchant ecosystem, and continued execution against its long-term platform strategy.

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