It's been a rough start to the year for Shopify (SHOP 2.24%) shareholders. The stock has lost nearly a third of its value in 2026, as of this writing. This comes despite the e-commerce software company continuing to report strong revenue growth.
Let's take a closer look at its recent first-quarter results and prospects to see if this dip is a good buying opportunity.
Strong revenue increases continue
For a market that loves revenue growth, Shopify delivered, with first-quarter sales soaring 34% year over year to $3.17 billion, surpassing the $3.08 billion analyst consensus estimate. It was its highest quarterly increase in over four years.
Image source: The Motley Fool.
Gross merchandise volume (GMV) on its commerce platform climbed by 35% year over year to $100.74 billion. International markets led the way, with GMV climbing 45%, while European GMV surged 48%, or 35% in constant currencies. Business-to-business GMV skyrocketed 80%, while offline GMV rose 33%, and Shop App GMV soared 70%.
Overall, merchant solution revenue (payment processing fees, Shopify Shipping, and other merchant services) jumped by 39% year over year to $2.42 billion. Subscription revenue grew 21% to $750 million, led by new customer additions and subscription upgrades. Monthly recurring revenue (MRR), which is the value of all its subscription plans at period end, increased by 16% to $205 million.
The company said that $67 billion, or 67%, of its GMV was processed by Shopify Payments in the quarter. This was a 41% increase in GMV processed using the internal service.
Shopify has been leaning into artificial intelligence (AI) and making good progress. Orders from AI-powered searches climbed by a multiple of 13, while AI-driven store traffic was up by a multiple of 8. Management said merchants using its new Sidekick AI assistant surged 385%, while users built 12,000 custom apps with it.
Second-quarter revenue guidance calls for an increase in the high 20% range, with a gross profit rise in the mid-20% range.
NASDAQ: SHOP
Key Data Points
Time to buy the dip on Shopify?
Following its latest sell-off, Shopify stock now trades at a valuation where it makes sense to be a buyer of the dip. With a forward price-to-sales ratio of 9.5 based on 2026 analyst estimates and below 8 based on 2027 projections, this is an enticing entry point for a company increasing sales by about 30%.
The company looks well-positioned for the rise of agentic AI in commerce. One of its big advantages is its Shopify catalog, which acts as a structured feed that lets AI agents search through items sold by shops on the platform.
AI agents need trustworthy structured data, and the Shopify catalog provides this because it is the backbone of the universal commerce protocol (UCP) that it co-developed with Alphabet. Meanwhile, Sidekick is seeing strong momentum by helping users drive growth in their own businesses.
As the world moves toward agentic commerce, Shopify is one of the few alternatives to Amazon. That makes it a highly valuable platform and makes the stock a buy.
