It’s been such a volatile ride for the top tech stocks ever since 2020 began. Here we are in 2024, and top tech titans, like Shopify (TSX: SHOP), are really starting to heat up again. Though Shopify shares have more than doubled over the past year, I wouldn’t dismiss the e-commerce gem as another reinflation of a bubble. This time around, Shopify has what it takes not only to sustain a rally to much higher levels but also to grow in a way to take a bit of market share away from rivals in the e-commerce and digital payments scene.
Indeed, it did not take long for shares of Shopify to go from absolutely hated to loved over the course of about a year! At this juncture, Shopify stock seems to be sustaining a push further into the triple digits. The $100 ceiling of resistance seems to be broken through, and the next stop could be the $130 range.
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SHOP stock: The relief rally could pick up pace this year
Undoubtedly, a lot has happened to Shopify in recent years. From the mass layoffs it was forced to conduct to the sale of notable logistics business, the company is continuing to change things in a hurry. Back in 2021, when pandemic lockdowns were in full swing, the company seems to have overinvested in many aspects of its business.
Who can blame the firm, though? Rates were low, and it seemed like we could be locked in for the long haul. Even Amazon (NASDAQ: AMZN) was guilty of overinvesting back in 2021. Now that Shopify and Amazon are back on better footing, having corrected past mistakes, it seems like they could be ready to grow fiercely again under their own power.
Of course, lower interest rates could allow growth companies to put their foot slightly back on the growth pedal. But I don’t expect 2021-esque levels of hiring or spending, at least not anytime soon. Shopify seems to have its sights set on the long haul now. And I think investors waiting around for another significant (50% or more) plunge in the stock could find themselves waiting a very long time.
Generative AI: It’s a potential catalyst for Shopify stock in 2024
It would have been nice to buy shares of SHOP at their bottom back in 2022. Although some analysts are no longer fans of the valuation, I view Shopify as a firm that can (and probably will) grow into its multiple. The $137.8 billion company still has plenty of room to grow.
And over the next three to five years, I believe it will do just that. The only question is whether growth will exceed expectations, which are now quite higher than they were a year ago. Indeed, expectations aren’t as obscene as back in 2021. But there is one major catalyst that could justify much higher multiples: generative artificial intelligence (AI).
Indeed, 2023 saw many tech firms showcase their latest AI products. Shopify has intriguing AI tools, but it may have a lot in its pipeline to excite us through 2024. In prior pieces, I praised Shopify for staying on the cutting edge of innovation. As every firm looks to extract value from AI, I expect Shopify to gain ground (and market share) from competitors.
Though Shopify is far from an AI company, I think we’ll reach a point where e-commerce and AI go together as well as peanut butter and jelly. Personally, I think Shopify stock’s bull run has just begun.
