Has Shopify (TSX:SHOP) finally peaked out after an incredible multi-year march off the depths of 2022? Undoubtedly, this isn’t the first time that shares of SHOP have had a painful bear market moment. And it’s not going to be the last.
For investors, extreme levels of downside volatility are par for the course, and while catching a falling knife, especially as the broader tech sector comes in, can be a move that mints you rapid losses in a few days or weeks, interested investors who still believe in the long-term Shopify story may wish to gradually punch their ticket into the name on weakness.
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Shopify is under pressure. It’s overblown, but question marks remain
Much of the latest round of selling in shares of SHOP has more to do with the state of the sector rather than any specific to Shopify and its latest round of quarterly earnings results. Indeed, AI disruption has caused quite the panic surrounding software stocks. But as is the case with most indiscriminate sector-wide sell-offs, there are bound to be gems to pick up on the way down. Is Shopify one of these gems? Or is the latest round of selling warranted?
Of course, AI stands out as a massive positive for the e-commerce sensation, but it also introduces quite a few uncertainties surrounding the future. Agentic commerce might actually work in favour of Shopify, as an AI shopping agent looks through all sites available for the best price for a certain good. And while agentic commerce may also cause greater rivalry for merchants, I do think that AI could be a net positive for Shopify if all goes well.
At the end of the day, Shopify isn’t just a place to build a site to sell things to customers; it’s a platform that’s pretty much a one-stop shop. The big question is whether the moat surrounding Shopify’s ecosystem will narrow as a result of agentic AI and the potential disruptors that could be hungry for a piece of the e-commerce market.
Could AI-native companies actually have the slight edge?
It’s really hard to tell right now. Amid such profound unknowns comes great fear, and that’s part of the reason why SHOP stock is down 24% year to date or around 34% from its all-time high hit back in October 2025.
Investors are overly anxious about AI’s potential economic downside
The premise of the Citrini report, which is causing anxiety in the markets right now, is that AI will remove friction from various industries, disrupting moats and causing a market upset at some point down the road (potentially 2028). I’ll admit. It’s an anxiety-inducing read, especially if you’re already worried about your job security.
What’s more, though, is that the bear-case scenario does seem to be a unique one without easy fixes. And given the pace of disruption, it could be tougher to tell which firms can adapt and thrive to become more AI-native, and which will plunge to zero. Shopify stands out as one of the companies that has adapted a long time ago.
The agentic AI tailwind, I think, could really beef up sales as AI shopping soars. But, at the same time, perhaps humans will want to retain their agency when shopping? It is fun and therapeutic to splurge, after all.
In any case, I think the big question mark surrounds what could happen to retail spending as a whole, especially if AI-induced layoffs cause great pain to the consumer. Will some form of universal basic income (UBI) be the fix? Who knows. Either way, I think Shopify will be a long-term winner, even if it means taking on more pain in the near term. In short, I’d hold Shopify through the volatility and get ready to buy once things calm down at the industry level.