When it comes to profiting as an investor from the ongoing artificial intelligence (AI) boom, various factors should be considered. Most notable among them, I believe, is whether there’s too much hype in an AI story. And whether the magnitude of hype has led to a valuation that entails a great deal of downside risk if there is some so-called bubble brewing in the field of AI. Indeed, bubbles can be rather tricky to track.
The only real way to tell if we’re in an AI or market bubble is to wait things out and see if there’s any massive bursting that leads to significant losses across the board. Indeed, even the world’s best AI company with the most envied growth stories and products can be a losing investment if you buy when hype and prices are too high.
Just because some fear a return of volatility from the AI firms does not mean AI is to be avoided, as there’s still value out there. Indeed, there’s real value to AI, and it goes above and beyond ChatGPT’s ability to help with homework, a recipe, or anything in between. As AI approaches the enterprise, perhaps there are outsized sales gains for a broad range of firms, including the ones you wouldn’t dub an AI-first innovator.
Shopify could gain further as it moves forward with its AI strategy
Shopify (TSX:SHOP) is an e-commerce company that seems to be positioning itself quite well to profit from the rise of more affordable (and more practical and applied) AI technologies. With DeepSeek shocking the world with its low training costs, we seem to be entering an era where AI computing can be affordable for the masses and smaller firms that aren’t willing to commit massive fortunes to be ahead for what’s sure to be a brief moment in time. For software companies with robust platforms, injecting some low-cost AI, I believe, could be a massive deal that investors should be paying close attention to.
With SHOP shares recently touching 52-week highs just shy of the $175-per-share mark, many skeptics may be inclined to take profits from the name. After all, shares are up 151% in the past two years. That solid gain seems less likely for the next two years. Either way, Shopify stock is still down 19% from its 2021 all-time highs. Shockingly, such levels could be eclipsed in months, especially if Shopify can make the most of the AI boom.
Shopify is shaping up to be a more “capital-light” kind of AI play
Whether we’re talking about the levelling up of Shopify’s Sidekick assistant—which I praised in previous pieces—or new, not-yet-released AI-driven tools to augment and enhance its merchant base, Shopify has ample drivers on the horizon to get excited about as it doubles down on the AI boom without breaking the bank.
Indeed, Shopify stands out as a firm that could get a decent return on investment (ROI) from AI. It’s not pouring tens of billions of dollars a year on model training and infrastructure building. Instead, it’s seeking to position and optimize its AI for specific use cases in the e-commerce arena. Perhaps Shopify’s trove of data will give it an edge as it expands its AI offerings further in this new year.
Of course, other e-tailers are embracing AI to jolt growth. One has to think they’re hungry for a larger slice of the e-commerce market. Either way, I like Shopify’s chances, given its history of placing the right bets in the right places. Moving forward, I expect Shopify to make smart but calculated and deliberate investments to beef up its AI capabilities.
