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Shares of Shopify Inc. (SHOP - Free Report) have declined 25.8% in the past month, underperforming the broader Zacks Computer and Technology sector's rise of 10.5% and the Zacks Internet-Services industry's growth of 15.8%.
SHOP’s share price performance has also been mixed relative to peers, including Amazon (AMZN - Free Report) , Wix.com (WIX - Free Report) and Commerce.com (CMRC - Free Report) , over the past month. Shares of Amazon have gained 6.4%, while WIX.com and Commerce.com have declined 27.6% and 13.6%, respectively.
Although Shopify reported strong first-quarter revenue and GMV growth, management noted that growing merchant usage of AI products, most notably Sidekick, increased LLM costs and said this usage-driven cost dynamic is expected to continue.
At the same time, the year-over-year increase in transaction and loan losses, primarily caused by credit, may have heightened investor scrutiny of Shopify’s expanding financial-services exposure. Combined with continued investment in AI infrastructure and uncertainty around the monetization framework for agentic commerce, these factors are likely to have contributed to a cautious investor stance toward the stock.
SHOP One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, SHOP stock is currently trading below its 50-day moving average, signaling a bearish trend.
SHOP Stock Trades Below the 50-Day Moving Average
Image Source: Zacks Investment Research
Given the significant pullback in Shopify’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy SHOP? Let’s find out.
What’s Pressuring SHOP Stock?
Despite a strong first-quarter print, Shopify is facing several underlying pressures that may limit near-term upside. Although the company reported broad-based growth across geographies, merchant sizes and channels in the first quarter, management acknowledged increased LLM costs tied to growing usage of AI products, most notably Sidekick. As Shopify embeds AI more deeply across merchant workflows, the cost of supporting higher usage may remain a key area of investor scrutiny.
Shopify’s expanding financial-services exposure is also contributing to investor caution. While payments, capital and credit products deepen merchant relationships and broaden platform monetization, they also increase sensitivity to credit performance and risk management. Management noted that transaction and loan losses rose year over year, with credit being the largest component of the increase.
Agentic commerce also remains an important area of scrutiny. Shopify emphasized its role in enabling discovery and selling inside ChatGPT, Microsoft Copilot and Google from one system of record, positioning the company at the center of AI-driven commerce. Management also stated that purchases through ChatGPT are economically comparable to Shopify storefront transactions. Still, investors are likely to continue assessing how durable Shopify’s economics will be as product discovery and checkout activity shift across new AI-led surfaces.
Cost dynamics add to the mixed setup. Shopify continues to invest in AI infrastructure, merchant-facing services, international expansion and platform depth — all of which are intended to strengthen its long-term competitive position. While these initiatives support merchant productivity and broader commerce penetration, they also introduce near-term questions around margin conversion, particularly as AI-related usage costs scale alongside adoption.
Can SHOP Overcome the Headwinds?
Despite these concerns, Shopify’s long-term positioning remains supported by a combination of product velocity, merchant scale and expanding platform utility. Management continues to frame AI as a structural advantage rather than a defensive investment, emphasizing that Sidekick is becoming increasingly central to how merchants set up, operate and grow their businesses. The ability to automate tasks, create custom apps and support workflow execution directly within Shopify strengthens the platform’s value proposition and may deepen merchant retention over time.
Shopify is also broadening its role from demand conversion to demand creation. Management highlighted the increasing importance of AI-driven discovery, Shop Campaigns, the Shop app and catalog-powered search in helping merchants reach buyers more efficiently. This matters because Shopify’s historical strength has been enabling merchants to sell and convert demand across channels. If the company can also become a more meaningful source of buyer discovery, it could expand its relevance in the merchant technology stack and support a larger long-term opportunity.
Enterprise, international and payments expansion provide additional support. Shopify continues to win larger merchants seeking unified commerce infrastructure, a lower total cost of ownership and faster execution compared with legacy systems. Management also pointed to continued international traction and higher Shopify Payments penetration as important drivers of platform monetization. In the first quarter, Shopify Payments processed $67 billion of GMV, up 41% year over year, reaching 67% penetration, underscoring the growing importance of payments within the broader platform.
Looking ahead, Shopify’s ability to overcome the current pressure will depend on execution across two fronts: sustaining product-led growth while demonstrating that AI and financial-services investments can scale efficiently. If the company can convert deeper merchant adoption, payments expansion and AI-led engagement into stronger operating leverage over time, the current concerns may prove manageable.
SHOP’s Stock Valuation & Technical Insights
Over the past 60 days, the Zacks Consensus Estimate for SHOP’s 2026 earnings per share (EPS) has increased from $1.77 to $1.80. Over the same time frame, EPS estimates for industry players, including Amazon, have increased 5.3%, while Wix.com has declined 2.9%. Meanwhile, estimates for Commerce.com have remained unchanged in the past 60 days.
SHOP Earnings Estimate Trend
Image Source: Zacks Investment Research
In terms of the forward 12-month price/sales (P/S), SHOP is currently trading at 8.17X compared with the broader sector’s 8.64X. Shopify shares are pricey compared with Amazon, Wix.com and Commerce.com. Shares of Amazon, Wix.com and Commerce.com are trading at P/S multiples of 3.28X, 1.33X and 0.63X, respectively.
SHOP’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
SHOP’s Investment Verdict: Hold for Now
Shopify remains a compelling long-term commerce platform, supported by expanding adoption across AI-enabled merchant tools, payments, enterprise commerce, international markets and demand-generation capabilities. The company’s product velocity and deepening platform utility continue to strengthen its competitive positioning, while upward earnings estimate revisions indicate that analysts remain constructive on its earnings trajectory despite the recent pullback.
That said, the near-term risk-reward appears balanced. Rising LLM costs tied to greater AI usage, higher credit-driven transaction and loan losses, ongoing investment needs and uncertainty around agentic-commerce monetization may continue to weigh on sentiment. Valuation also warrants attention, as SHOP continues to trade at a premium to Amazon, Wix.com and Commerce.com on a forward P/S basis.
Given these dynamics, maintaining a position in this Zacks Rank #3 (Hold) stock appears sensible for existing shareholders. Prospective investors may benefit from waiting for additional clarity around AI-related cost leverage, credit-loss stabilization and monetization across emerging AI-driven commerce channels before initiating new positions.
View the Zacks #1 Rank List
Image: Bigstock
Shopify Stock Slips 26% in a Month: Should You Buy, Sell or Hold?
Key Takeaways
Shares of Shopify Inc. (SHOP - Free Report) have declined 25.8% in the past month, underperforming the broader Zacks Computer and Technology sector's rise of 10.5% and the Zacks Internet-Services industry's growth of 15.8%.
SHOP’s share price performance has also been mixed relative to peers, including Amazon (AMZN - Free Report) , Wix.com (WIX - Free Report) and Commerce.com (CMRC - Free Report) , over the past month. Shares of Amazon have gained 6.4%, while WIX.com and Commerce.com have declined 27.6% and 13.6%, respectively.
Although Shopify reported strong first-quarter revenue and GMV growth, management noted that growing merchant usage of AI products, most notably Sidekick, increased LLM costs and said this usage-driven cost dynamic is expected to continue.
At the same time, the year-over-year increase in transaction and loan losses, primarily caused by credit, may have heightened investor scrutiny of Shopify’s expanding financial-services exposure. Combined with continued investment in AI infrastructure and uncertainty around the monetization framework for agentic commerce, these factors are likely to have contributed to a cautious investor stance toward the stock.
SHOP One-Month Price Performance
Image Source: Zacks Investment Research
From a technical perspective, SHOP stock is currently trading below its 50-day moving average, signaling a bearish trend.
SHOP Stock Trades Below the 50-Day Moving Average
Image Source: Zacks Investment Research
Given the significant pullback in Shopify’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy SHOP? Let’s find out.
What’s Pressuring SHOP Stock?
Despite a strong first-quarter print, Shopify is facing several underlying pressures that may limit near-term upside. Although the company reported broad-based growth across geographies, merchant sizes and channels in the first quarter, management acknowledged increased LLM costs tied to growing usage of AI products, most notably Sidekick. As Shopify embeds AI more deeply across merchant workflows, the cost of supporting higher usage may remain a key area of investor scrutiny.
Shopify’s expanding financial-services exposure is also contributing to investor caution. While payments, capital and credit products deepen merchant relationships and broaden platform monetization, they also increase sensitivity to credit performance and risk management. Management noted that transaction and loan losses rose year over year, with credit being the largest component of the increase.
Agentic commerce also remains an important area of scrutiny. Shopify emphasized its role in enabling discovery and selling inside ChatGPT, Microsoft Copilot and Google from one system of record, positioning the company at the center of AI-driven commerce. Management also stated that purchases through ChatGPT are economically comparable to Shopify storefront transactions. Still, investors are likely to continue assessing how durable Shopify’s economics will be as product discovery and checkout activity shift across new AI-led surfaces.
Cost dynamics add to the mixed setup. Shopify continues to invest in AI infrastructure, merchant-facing services, international expansion and platform depth — all of which are intended to strengthen its long-term competitive position. While these initiatives support merchant productivity and broader commerce penetration, they also introduce near-term questions around margin conversion, particularly as AI-related usage costs scale alongside adoption.
Can SHOP Overcome the Headwinds?
Despite these concerns, Shopify’s long-term positioning remains supported by a combination of product velocity, merchant scale and expanding platform utility. Management continues to frame AI as a structural advantage rather than a defensive investment, emphasizing that Sidekick is becoming increasingly central to how merchants set up, operate and grow their businesses. The ability to automate tasks, create custom apps and support workflow execution directly within Shopify strengthens the platform’s value proposition and may deepen merchant retention over time.
Shopify is also broadening its role from demand conversion to demand creation. Management highlighted the increasing importance of AI-driven discovery, Shop Campaigns, the Shop app and catalog-powered search in helping merchants reach buyers more efficiently. This matters because Shopify’s historical strength has been enabling merchants to sell and convert demand across channels. If the company can also become a more meaningful source of buyer discovery, it could expand its relevance in the merchant technology stack and support a larger long-term opportunity.
Enterprise, international and payments expansion provide additional support. Shopify continues to win larger merchants seeking unified commerce infrastructure, a lower total cost of ownership and faster execution compared with legacy systems. Management also pointed to continued international traction and higher Shopify Payments penetration as important drivers of platform monetization. In the first quarter, Shopify Payments processed $67 billion of GMV, up 41% year over year, reaching 67% penetration, underscoring the growing importance of payments within the broader platform.
Looking ahead, Shopify’s ability to overcome the current pressure will depend on execution across two fronts: sustaining product-led growth while demonstrating that AI and financial-services investments can scale efficiently. If the company can convert deeper merchant adoption, payments expansion and AI-led engagement into stronger operating leverage over time, the current concerns may prove manageable.
SHOP’s Stock Valuation & Technical Insights
Over the past 60 days, the Zacks Consensus Estimate for SHOP’s 2026 earnings per share (EPS) has increased from $1.77 to $1.80. Over the same time frame, EPS estimates for industry players, including Amazon, have increased 5.3%, while Wix.com has declined 2.9%. Meanwhile, estimates for Commerce.com have remained unchanged in the past 60 days.
SHOP Earnings Estimate Trend
Image Source: Zacks Investment Research
In terms of the forward 12-month price/sales (P/S), SHOP is currently trading at 8.17X compared with the broader sector’s 8.64X. Shopify shares are pricey compared with Amazon, Wix.com and Commerce.com. Shares of Amazon, Wix.com and Commerce.com are trading at P/S multiples of 3.28X, 1.33X and 0.63X, respectively.
SHOP’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
SHOP’s Investment Verdict: Hold for Now
Shopify remains a compelling long-term commerce platform, supported by expanding adoption across AI-enabled merchant tools, payments, enterprise commerce, international markets and demand-generation capabilities. The company’s product velocity and deepening platform utility continue to strengthen its competitive positioning, while upward earnings estimate revisions indicate that analysts remain constructive on its earnings trajectory despite the recent pullback.
That said, the near-term risk-reward appears balanced. Rising LLM costs tied to greater AI usage, higher credit-driven transaction and loan losses, ongoing investment needs and uncertainty around agentic-commerce monetization may continue to weigh on sentiment. Valuation also warrants attention, as SHOP continues to trade at a premium to Amazon, Wix.com and Commerce.com on a forward P/S basis.
Given these dynamics, maintaining a position in this Zacks Rank #3 (Hold) stock appears sensible for existing shareholders. Prospective investors may benefit from waiting for additional clarity around AI-related cost leverage, credit-loss stabilization and monetization across emerging AI-driven commerce channels before initiating new positions.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.