Is it time to sell your Shopify stock?

Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials TSX:SHOP) reported its first quarterly revenue miss against analyst expectations in three years, but strong free cash flow and early growth in AI-driven shopping suggest the Ottawa-based e-commerce company has opportunities to expand its business.

ATB Cormark Capital Markets analyst Martin Toner raised his target on Shopify to $237.00 from $234.00, maintaining his “Sector Perform” rating because of concerns about the stock’s valuation.

“Despite the miss, revenue growth deceleration is modest and overall growth remains strong; valuation keeps us on the sidelines,” Toner said in his Nov. 4 report.

Shopify reported third-quarter revenue of US$3.74-billion, up 31.6% year-over-year but 0.9% below consensus of US$3.78-billion. The result marked its first revenue miss in 12 quarters. Gross merchandise volume (GMV), representing the value of goods sold through its platform, increased 29.5% to US$119.1-billion, approximately 1.5% below consensus. Merchant Solutions revenue increased 35.5% to US$2.91-billion, while Subscription Solutions revenue rose 19.6% to US$836-million, falling short of expectations.

However, profitability exceeded forecasts as operating expenses declined to 32% of revenue from 37% a year earlier.

Free cash flow reached US$816-million, representing a 21.8% margin, compared with Toner’s US$554-million forecast and consensus of US$738-million.

Toner cautioned that much of the improvement reflected temporary factors, including marketing experiments, tax receivable timing and an accounting change involving merchant cash advances. Management attributed approximately 1.5 percentage points of the year-over-year margin improvement to structural operating efficiencies.

The analyst said artificial intelligence could become an important growth driver as consumers increasingly use AI assistants to search for and purchase products. Traffic to Shopify merchants from AI channels increased 2.6 times year-over-year, while orders originating through those channels grew 3.3 times. Customers arriving from AI-powered shopping tools were also 64% more likely to complete purchases than visitors from other channels.

AI-powered searches using Shopify’s product catalogue converted at twice the rate of general AI searches, suggesting that access to structured product information could help the company capture more sales through emerging shopping platforms.

“Volumes are still small, but early data points to the potential of agentic commerce for Shopify,” Toner said.He said Shopify’s partnerships with AI platforms, including Claude and Grok, could provide additional ways for merchants to reach customers, while Shop Pay gives shoppers a way to complete purchases.

Shop Pay GMV increased 50% year-over-year during the quarter.

Shopify expects fourth-quarter revenue growth in the low-30% range and gross profit growth in the high-20% range, slightly above consensus expectations.

Toner raised his fiscal 2026 revenue estimate to US$15.32-billion from US$15.21-billion and his EBITDA forecast to US$2.22-billion from US$2.14-billion. For fiscal 2027, he increased his revenue forecast to US$19.31-billion from US$18.61-billion but lowered his EBITDA estimate to US$3.53-billion from US$3.76-billion, reflecting a more cautious outlook for profitability. He also increased his 2027 free cash flow forecast to US$3.46-billion from US$3.09-billion.

Toner argued that Shopify’s strong growth and emerging AI opportunities support his higher target, but its valuation of approximately 51 times estimated 2027 EBITDA leaves limited room for disappointment.

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