2025 Could Be a Breakthrough Year for Shopify Stock: Here’s Why

Shopify (TSX:SHOP) stock could have room to breakout in the new year as it doubles down on AI tech.

| More on:

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It’s been a magnificent year for Shopify (TSX:SHOP) stock, now up well over 63% year to date, beating the TSX Index by a wide margin. Despite the latest run-up, shares may still prove cheap relative to its long-term growth trajectory. Undoubtedly, the company stands out as a significant beneficiary as valuable new generative artificial intelligence (gen AI) technologies and tools work their way into the ecosystem.

Indeed, Shopify stands out as a firm that can augment customers in a way that allows them to drive revenues and margins simultaneously. Indeed, large language models (LLMs) can do many impressive things, including writing poems or even helping with homework. That said, the real test, I believe, is how LLMs can help firms improve their business fundamentals via automation and optimization.

Indeed, if the AI revolution carries over the next couple of years, the applications had better start generating enormous profits for more firms than just the AI accelerator makers themselves. In other words, there had better be some massive winners from this AI gold rush other than the so-called “pick-and-shovel” plays.

Indeed, much of the cash during the actual gold rush was made via the firms that sold the equipment to gold prospectors. For the AI scene, the big question is how far and wide the benefits will run. There’s ample opportunity for e-commerce firms like Shopify to benefit significantly from what some may call the “next phase” of the AI boom.

A massive upgrade from Loop Capital

Recently, shares of Shopify received a pretty big upgrade from an analyst named Anthony Chukumba over at Loop Capital.

Mr. Chukumba hiked his price target on SHOP stock by a whopping US$30 to US$140 per share (that works out to just shy of CA$200 per share) while upgrading the rating to buy from hold (the equivalent of overweight from equal-weight). What’s the reason behind the significant upgrade?

He’s a big fan of Shopify’s ability to use AI to improve the lives of its merchants. Notably, he sees personalized response recommendations as having the potential to jolt growth.

He’s right on the money. The AI personalization factor will eventually benefit a broader range of businesses. Shopify seems like one of the ships poised to rise sooner than most others in the sea. In numerous prior pieces, I urged investors not to discount the company’s footing in the AI race. Mr. Chukumba’s latest upgrade reinforces my already bullish stance on Shopify stock as it looks to enter a big year for AI.

Created with Highcharts 11.4.3Shopify PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Shopify stock is pricey, but the AI catalysts are real

Now, it’s hard to tell just how much AI hype has worked its way into the valuation after the latest upside surge. The stock isn’t cheap at more than 105 times trailing price to earnings (P/E). Things aren’t much better on a forward-looking basis, with SHOP stock going for 80 times forward P/E.

Undoubtedly, there’s a much higher bar set for Shopify in the new year. But if Shopify can get the personalized AI opportunity right, perhaps shares could continue rolling towards that $200 mark and, just maybe, new all-time highs of around $215 per share.

As AI personalization catalysts propel Shopify and its peers in the new year, while holiday sales numbers eventually flow in, I think it’s tough to overlook Shopify stock any longer. Arguably, it’s one of Canada’s most magnificent stocks.

Should you invest $1,000 in TransAlta right now?

Before you buy stock in TransAlta, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and TransAlta wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

The Only 2 AI Stocks You’ll Need for Long-Term Growth

Here are two top Canadian tech stocks that could help you benefit from surging demand for AI technology and infrastructure.

Read more »