It's been a wild day for Shopify (SHOP 2.59%). The fast-growing e-commerce software stock initially gained in pre-market trading as it reported strong revenue growth, but the stock quickly turned red when the regular trading session opened, as broader fears about the software sector weighed on the stock.
As of 12:18 p.m. ET, the stock was down 12.1%.
Image source: Getty Images.
What happened with Shopify?
The pre-market reaction should make it clear that Shopify's results were well-received.
Revenue rose 31% to $3.67 billion, which topped the consensus at $3.59 billion, and gross merchandise volume (GMV) was up 31% to $123.8 billion. Its GMV growth in 2025 was the fastest it's been since 2021.
On the bottom line, Shopify reported adjusted earnings per share of $0.48, which was ahead of the consensus at $0.51.
Despite the generally strong results, driven by what the company called a new era of "AI commerce", broader fears about AI disruption in the software sector spoiled the celebration as the stock went from double-digit gains in pre-market trading to double-digit losses, a rare reversal, though there was little in the numbers that seemed to justify that.
NASDAQ: SHOP
Key Data Points
What it means for Shopify
On the earnings call, Shopify President Harley Finkelstein gave a full-throated argument for the company's AI strategy, saying it's opening up AI capabilities on the platform to non-Shopify merchants, and it's formed partnerships with OpenAI and Google Gemini that allow for an embedded AI shopping experience.
Looking ahead to the first quarter, Shopify expects strong growth to continue, targeting low-thirties revenue growth.
Overall, Shopify is executing well, and its position as a platform providing a wide range of services for e-commerce sellers seems to make it more insulated from AI disruption than other software stocks.
No one knows where broader market sentiment will push software stocks, and Shopify is still expensive even after falling by more than a third. However, the business is in great shape, and it's playing offense with AI. Buying the dip should pay off for long-term investors, despite the short-term volatility.
