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For the to-be-reported quarter, Shopify expects revenues to grow at a low-30% rate on a year-over-year basis.
The Zacks Consensus Estimate for revenues is currently pegged at $3.08 billion, suggesting growth of 30.7% from the year-ago quarter’s reported figure.
The consensus mark for earnings is pegged at 32 cents per share, unchanged over the past 30 days and indicating a 28% growth from the figure reported in the year-ago quarter.
Consensus Estimate Trend
Image Source: Zacks Investment Research
SHOP’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, matched once and missed twice, the earnings surprise being 3.29%, on average.
Let’s see how things have shaped up prior to this announcement.
Key Factors to Note for SHOP’s Q1
Shopify’s first-quarter 2026 results are expected to have benefited Shop Pay and payments penetration. Payments processed 68% of Gross Merchandise Volume (GMV) in the fourth quarter of 2025, and management expects robust growth in payments to continue, driven by Shop Pay. The expansion of Shopify Payments in 60 new countries has been a key catalyst. These are expected to have boosted Shopify’s high margin and recurring revenue growth.
Shopify is benefiting from strong growth in its merchant base, a trend that is likely to have been reflected in first-quarter results. Merchant Solutions revenues are expected to have benefited from the company’s AI push through Shop App (discovery) and Shop Campaigns (ads). AI-driven shopping and discovery are major strategic drivers as orders from AI Search jumped 15 times on a trailing 12-month basis (since January 2025). Growing adoption of Sidekick, Shopify’s on-platform intelligent assistant, reflects the company’s expanding footprint among AI-first merchants. SHOP has expanded integrations, enabling merchants to sell across ChatGPT, Google AI Mode/Gemini and Microsoft Copilot.
Shopify’s to-be-reported quarterly results are expected to reflect strong B2B GMV (more than 84% growth in the fourth quarter of 2025) and offline retail. The first-quarter 2026 results are also expected to have benefited from strong international growth, particularly in Europe.
However, Shopify’s first-quarter performance is expected to have suffered from seasonality, modest earnings growth given gross margin headwind, a challenging macroeconomic condition, as well as stiff competition from the likes of Amazon (AMZN - Free Report) , Wix.com (WIX - Free Report) and Commerce.com (CMRC - Free Report) . The company’s gross margin is suffering from a higher mix of low-margin Merchant Solutions revenues and the negative impact of rapid payments penetration.
SHOP Shares Outperform Sector, Industry
Image Source: Zacks Investment Research
SHOP shares have dropped 24.8% year to date (YTD), underperforming the Zacks Computer & Technology sector’s rise of 10.8% and the Zacks Internet Services industry’s return of 20.1%.
Shopify has outperformed peers including Wix.com and Commerce.com but lagged Amazon. YTD, Amazon shares have returned 14.8% while Wix.com and Commerce.com shares have dropped 28.1% and 31.3%, respectively.
Shopify is facing stiff competition from Amazon, which dominates the U.S. e-commerce market, driven by its “Buy with Prime” service, which combines its payments and fulfillment services and makes them available at checkout on other websites while promising faster delivery for Prime members. AI integration across operations is enhancing personalization, logistics and AWS offerings, strengthening its competitive positioning. Wix is gaining momentum in its core business, driven by solid performance from new user cohorts, while Commerce.com’s strategy to provide flexible, enterprise-grade subscription solutions is expected to drive recurring base revenues.
SHOP Stock’s Price Performance
Moreover, the Value Score of D suggests a stretched valuation for Shopify at this moment.
SHOP stock is trading at a premium with a forward 12-month price/sales of 10.63X compared with the industry’s 8.53X, Amazon’s 3.38X, Wix.com’s 1.96X and Commerce.com’s 0.72X.
Shopify’s Current Valuation
Image Source: Zacks Investment Research
AI Push, Expanding International Footprint to Aid SHOP
Shopify’s long-term prospects are strong, given its growing merchant base and expanding partner base. Shopify’s rich partner, which includes Microsoft, TikTok, Roblox, PayPal, Snap, Pinterest, Criteo, IBM, Cognizant, Google Cloud and Adayen, has further expanded its merchant base. Shopify’s partnership with Perplexity is helping it gain a footprint in conversational shopping, while partners like OpenAI (ChatGPT) and Microsoft (CoPilot) are helping to smooth out in-chat shopping flows.
Shopify’s growing international footprint is a key catalyst. HOP has been expanding localized payment options, language capabilities and cross-border commerce tools to make its platform more accessible globally. Shopify Payments has been expanded to 60 new countries, Shopify Capital is now available in eight countries, and Managed Markets 2.0 enables faster international payouts and broader payment method support. These capabilities allow businesses to sell internationally while managing compliance, payments and logistics through SHOP’s integrated ecosystem. International growth has been broadly balanced between new merchant acquisitions and expanded activity from existing merchants, suggesting engagement is deepening organically.
Conclusion
Shopify is expected to suffer from gross margin headwinds and stiff competition in the near term. Stretched valuation is a headwind for SHOP. However, AI infusion and expanding international footprint bode well for the company’s long-term prospects. So, investors already holding the stock should remain put.
View the Zacks #1 Rank List
Image: Bigstock
Shopify Stock Before Q1 Earnings: Smart Buy or Risky Move?
Key Takeaways
Shopify (SHOP - Free Report) is set to report first-quarter 2026 results on May 5.
For the to-be-reported quarter, Shopify expects revenues to grow at a low-30% rate on a year-over-year basis.
The Zacks Consensus Estimate for revenues is currently pegged at $3.08 billion, suggesting growth of 30.7% from the year-ago quarter’s reported figure.
The consensus mark for earnings is pegged at 32 cents per share, unchanged over the past 30 days and indicating a 28% growth from the figure reported in the year-ago quarter.
Consensus Estimate Trend
Image Source: Zacks Investment Research
SHOP’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, matched once and missed twice, the earnings surprise being 3.29%, on average.
Shopify Inc. Price and EPS Surprise
Shopify Inc. price-eps-surprise | Shopify Inc. Quote
Let’s see how things have shaped up prior to this announcement.
Key Factors to Note for SHOP’s Q1
Shopify’s first-quarter 2026 results are expected to have benefited Shop Pay and payments penetration. Payments processed 68% of Gross Merchandise Volume (GMV) in the fourth quarter of 2025, and management expects robust growth in payments to continue, driven by Shop Pay. The expansion of Shopify Payments in 60 new countries has been a key catalyst. These are expected to have boosted Shopify’s high margin and recurring revenue growth.
Shopify is benefiting from strong growth in its merchant base, a trend that is likely to have been reflected in first-quarter results. Merchant Solutions revenues are expected to have benefited from the company’s AI push through Shop App (discovery) and Shop Campaigns (ads). AI-driven shopping and discovery are major strategic drivers as orders from AI Search jumped 15 times on a trailing 12-month basis (since January 2025). Growing adoption of Sidekick, Shopify’s on-platform intelligent assistant, reflects the company’s expanding footprint among AI-first merchants. SHOP has expanded integrations, enabling merchants to sell across ChatGPT, Google AI Mode/Gemini and Microsoft Copilot.
Shopify’s to-be-reported quarterly results are expected to reflect strong B2B GMV (more than 84% growth in the fourth quarter of 2025) and offline retail. The first-quarter 2026 results are also expected to have benefited from strong international growth, particularly in Europe.
However, Shopify’s first-quarter performance is expected to have suffered from seasonality, modest earnings growth given gross margin headwind, a challenging macroeconomic condition, as well as stiff competition from the likes of Amazon (AMZN - Free Report) , Wix.com (WIX - Free Report) and Commerce.com (CMRC - Free Report) . The company’s gross margin is suffering from a higher mix of low-margin Merchant Solutions revenues and the negative impact of rapid payments penetration.
SHOP Shares Outperform Sector, Industry
Image Source: Zacks Investment Research
SHOP shares have dropped 24.8% year to date (YTD), underperforming the Zacks Computer & Technology sector’s rise of 10.8% and the Zacks Internet Services industry’s return of 20.1%.
Shopify has outperformed peers including Wix.com and Commerce.com but lagged Amazon. YTD, Amazon shares have returned 14.8% while Wix.com and Commerce.com shares have dropped 28.1% and 31.3%, respectively.
Shopify is facing stiff competition from Amazon, which dominates the U.S. e-commerce market, driven by its “Buy with Prime” service, which combines its payments and fulfillment services and makes them available at checkout on other websites while promising faster delivery for Prime members. AI integration across operations is enhancing personalization, logistics and AWS offerings, strengthening its competitive positioning. Wix is gaining momentum in its core business, driven by solid performance from new user cohorts, while Commerce.com’s strategy to provide flexible, enterprise-grade subscription solutions is expected to drive recurring base revenues.
SHOP Stock’s Price Performance
Moreover, the Value Score of D suggests a stretched valuation for Shopify at this moment.
SHOP stock is trading at a premium with a forward 12-month price/sales of 10.63X compared with the industry’s 8.53X, Amazon’s 3.38X, Wix.com’s 1.96X and Commerce.com’s 0.72X.
Shopify’s Current Valuation
Image Source: Zacks Investment Research
AI Push, Expanding International Footprint to Aid SHOP
Shopify’s long-term prospects are strong, given its growing merchant base and expanding partner base. Shopify’s rich partner, which includes Microsoft, TikTok, Roblox, PayPal, Snap, Pinterest, Criteo, IBM, Cognizant, Google Cloud and Adayen, has further expanded its merchant base. Shopify’s partnership with Perplexity is helping it gain a footprint in conversational shopping, while partners like OpenAI (ChatGPT) and Microsoft (CoPilot) are helping to smooth out in-chat shopping flows.
Shopify’s growing international footprint is a key catalyst. HOP has been expanding localized payment options, language capabilities and cross-border commerce tools to make its platform more accessible globally. Shopify Payments has been expanded to 60 new countries, Shopify Capital is now available in eight countries, and Managed Markets 2.0 enables faster international payouts and broader payment method support. These capabilities allow businesses to sell internationally while managing compliance, payments and logistics through SHOP’s integrated ecosystem. International growth has been broadly balanced between new merchant acquisitions and expanded activity from existing merchants, suggesting engagement is deepening organically.
Conclusion
Shopify is expected to suffer from gross margin headwinds and stiff competition in the near term. Stretched valuation is a headwind for SHOP. However, AI infusion and expanding international footprint bode well for the company’s long-term prospects. So, investors already holding the stock should remain put.
Shopify currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to start accumulating the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.