After a rough start to the year for its stock, Shopify (SHOP +2.80%) shares have come roaring back, bolstered by its latest earnings report. After falling to a low of $94, the stock is once again nearing $150 and is down less than 10% year to date.
Dubbed a potential AI loser earlier this year, Shopify is flipping the script, showing it has the potential to be a big AI winner with agentic commerce. This all starts with its Shopify Catalog, which is built on the Universal Commerce Protocol (UCP) that it co-developed with Alphabet and others. Shopify Catalog structures product information and maps it to a standard product taxonomy (organizing items by shared categories and attributes) that feeds the product data into AI search engines, shopping apps, and agentic storefronts. Or said another way, Shopify is taking billions of products and simplifying them into an AI-ready database.
Dozens of retailers and platforms have already adopted UCP, which was introduced at the start of the year, and AI searches powered by Catalog are converting at twice the rate as scraped data. Meanwhile, Shopify saw AI-driven orders and traffic triple year over year in the second quarter. At the same time, its AI tools, led by its Sidekick AI assistant, have been seeing strong adoption, with Sidekick usage increasing 3.6 times among merchants.
Image source: The Motley Fool.
Shopify's core business remains strong
While agentic AI represents a huge opportunity, the company's overall business continues to thrive. Its Q2 sales soared 34% year over year to $3.58 billion, surpassing the $3.45 billion consensus analyst estimate.
Meanwhile, its underlying metrics also look strong across the board. Gross merchandise volume (GMV) on its commerce platform increased by 32% year over year to $115.57 billion, with North American GMV rising 28% and European GMV climbing 34% in constant currencies. Business-to-business GMV, meanwhile, soared 76%, while offline GMV jumped 32% and Shop App GMV grew 70%.
Overall, merchant solution revenue (payment processing fees, Shopify Shipping, and other merchant services) jumped by 37% year over year to $2.78 billion. Subscription revenue increased by 22% to $802 million, led by its standard plan. Monthly recurring revenue (MRR), which is the value of all its subscription plans at period end, grew by 19% to $221 million.
Shopify Payments continues to see strong adoption, accounting for 68% of its global GMV in the quarter. It is now available in 40 countries, while it saw a 350-basis-point increase in Europe.
While traditionally known as a solution for small and mid-sized brands and retailers, Shopify continues to attract large brands, once again adding some well-known brands like Guess, Aritzia, and Avon to its platform. The company said large brands are increasingly choosing it for its unified commerce capabilities and speed to market.
Looking ahead, Shopify forecasts Q3 revenue to grow in the low 30% range and gross profit to rise in the mid- to high 20% range.
NASDAQ: SHOP
Key Data Points
Can the stock keep its momentum?
Shopify looks like one of the companies best positioned for agentic commerce. It isn't just adapting to agentic commerce; it is actively defining the protocol layer (UCP) and API infrastructure (Catalog) that make conversational shopping possible.
The Shopify Catalog can provide the trustworthy, structured data that AI commerce agents require to perform optimally, positioning the company to be the leader in this emerging field. And while there is always the risk of frontier AI model companies looking to bypass this layer, Shopify's ingrained platform and AI model-agnostic approach should prove to be an advantage.
Shopify's platform is one of the true independent alternatives that retailers and brands can turn to in order to compete against Amazon, which should help it continue to drive strong growth. Its position in agentic commerce, meanwhile, only makes its platform all the more valuable.
Trading at a forward price-to-sales ratio of 10 based on 2027 analyst projections, this growth stock remains attractive given its consistent 30%-plus revenue growth and agentic AI prospects.
