Shopify (SHOP) is back in focus after a packed February update that combined strong fourth quarter revenue, upbeat guidance for early 2026 and a new US$2b share repurchase plan.

The recent guidance and buyback news comes after a sharp pullback, with the share price down 25.6% year to date and 26.6% over 90 days, even as the 3 year total shareholder return is around 2.8x. Short term momentum has softened despite earnings upgrades and growing attention on Shopify’s role in AI driven commerce.

If this Shopify reset has you thinking about where AI could reshape commerce next, it may be worth scanning 59 profitable AI stocks that aren't just burning cash as a way to find other cash generative names tied to this theme.

With the share price down sharply this year despite revenue of US$11.56b, net income of US$1.23b and growth in the low 30s guided for early 2026, is Shopify now on sale or already pricing in its next leg of expansion?

Most Popular Narrative: 37.3% Undervalued

According to the most followed narrative, Shopify’s fair value of $186.64 sits well above the last close at $116.93, which frames the latest pullback in a very different light.

• AI Store Builder + Sidekick features are increasing user engagement and reducing onboarding friction.

• Sidekick users doubled from Dec 2024 to May 2025: https://techcrunch.com/2025/05/21/shopify-launches-an-ai-powered-store-builder-as-part-of-its-latest-update/

Want to see how a higher growth runway, steady margins and a future earnings multiple all come together in one story? The key ingredients behind that $186.64 fair value are spelled out in the narrative, including how revenue, profitability and required returns fit into a single set of assumptions. Curious which of those levers does most of the heavy lifting in the model, and how that compares to today’s $116.93 share price?

Result: Fair Value of $186.64 (UNDERVALUED)

However, weaker consumer confidence and pressure on smaller US merchants from tariffs and higher input costs could challenge those growth assumptions and limit Shopify’s long term opportunity.

Another View: Rich Multiples Raise the Bar

That $186.64 fair value suggests upside, but the current P/E of 123.9x tells a very different story. It is far above the US IT industry at 20.1x, the peer average at 33.9x, and even the 50x fair ratio that our models suggest the market could move toward. If sentiment cools, how much multiple compression risk are you really comfortable with?

Next Steps

If this mix of growth potential and valuation questions leaves you on the fence, it is worth acting now to review the company’s 1 key reward and 2 important warning signs before you decide.

Looking for more investment ideas?

If Shopify has sharpened your focus, do not stop here. The right watchlist can tip the balance on your next decision, so keep hunting for edges.

• Target potential mispricings by scanning 51 high quality undervalued stocks that pair solid fundamentals with prices that may not fully reflect their underlying strength.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.