The stock market undergoes various cycles of dips and rallies. In a given macroeconomic situation, some sectors perform and some don’t. In 2023 and 2024, the technology sector saw a sharp recovery after crashing in 2022. The 2022 crash was driven by accelerated interest rate hikes, which burst the bubble on all overvalued tech stocks. The 2023 recovery was driven by the artificial intelligence (AI) frenzy triggered by ChatGPT. These were the broad sector trends, but not all tech stocks performed according to the trend.
Not all tech stocks are worth buying
Some followed the 2021 growth trend of work-from-home, but not the 2023 AI trend. Thus, it is imperative to look at the individual company’s performance rather than just the sectoral trend before investing.
Let’s take the case of Shopify (TSX:SHOP) and Lightspeed Commerce (TSX:LSPD). They both soared during the pandemic when investors made money from the e-commerce wave. Between September 17, 2020 and their 2021 peak, Shopify and Lightspeed’s share price surged 80% and 308%, respectively. They even fell 80% in the 2022 tech meltdown. While Shopify recovered partially, Lightspeed didn’t. What happened?
Shopify vs. Lightspeed
Shopify recovered partially by selling its logistics business and keeping the growth cycle going. The company has sustained its revenue growth rate at a mid-20% rate. It has successfully reported positive operating income in all four quarters in 2024. This recovery turned around the 2022 dip into a 291% rally from October 2022 to June 2025.
However, Lightspeed failed to turn profitable as it made too many share-based acquisitions during the 2021 tech bubble, which significantly diluted its equity. Short-seller Spruce Point targeted the stock, accusing the company of a lack of transparency regarding margin decline. At a time when the company was in trouble, it underwent a management change as founder and CEO Dax Dasilva stepped down, and JP Chauvet took control in February 2022.
Chauvet was tasked to turn those acquisitions profitable in an environment where consumer spending was falling. Dasilva returned in February 2024 as interim CEO, and the cleanup began. The company impaired its goodwill twice in five years, US$748.7 million in fiscal 2023 and US$556.4 million in fiscal 2025. The impairment was triggered, as its share price had lost more than 80% in value, because of which its net assets exceeded its market capitalization. Although Lightspeed has reduced its losses, it has not yet turned profitable.
One tech stock to buy and one to avoid
Tariff uncertainty has once again dampened consumer discretionary spending. At such times, it is better to avoid Lightspeed Commerce, which could not perform even in a strong economy. While it can still be a good stock for active traders who wish to benefit from the holiday season rally between September and November, it may not be a good stock to buy and hold.
Lightspeed stock has been making new lows every time. Its share price fell 19% from its previous low in October 2023. Also, its 52-week highs are falling, with its 2024 high of $26.60 lower than the 2023 high of $27.82.
Shopify, on the other hand, is a stock to buy, as the company leverages economies of scale to make profits. The stock is in an uptrend as its 52-week highs and lows are greater than the previous ones.
