Artificial intelligence (AI) stocks are the hottest story in global markets right now. A recent study by DayTrading.com found that while there certainly are risks associated with AI, not every stock belongs in that category. There are record capital inflows, sky-high valuations, one-sided sentiment, and investing driven by FOMO rather than common sense. Yet we’re also seeing genuine use cases for AI and infrastructure investment at a monumental scale.
Canadian investors are asking how they can take part without chasing the same U.S. names that dominate headlines. One option is sitting right at home. Shopify (TSX:SHOP) turned into one of the country’s best-known companies and is now leaning into AI in ways that could make it a long-term winner.
What happened
The past year has been a roller coaster in tech, but Shopify’s momentum has been hard to ignore. Shares are up almost 91% over the past year, climbing to around $195 and pushing its market cap past $250 billion. That kind of run put it in the same conversation as some of the largest e-commerce names globally. At the same time, Shopify’s valuation is steep, with a forward price-to-earnings (P/E) ratio near 97. Investors are paying a premium because they believe the company can keep executing on growth while layering in new technology like AI.
The AI stock’s latest results gave more fuel to this. In the second quarter, Shopify posted 31% revenue growth and an impressive 16% free cash flow margin. That’s eight consecutive quarters of double-digit free cash flow margins, a feat many tech names can only dream of. Gross merchandise volume, which tracks the value of transactions processed across its platform, showed broad strength across North America, Asia, and especially Europe.
AI is playing a bigger role in how Shopify attracts and keeps merchants. Its platform now offers tools that help businesses create product descriptions, analyze sales patterns, and personalize customer engagement. These features may sound simple. Yet for small and mid-sized merchants who don’t have the resources of large retailers, they can mean the difference between flat sales and rapid growth.
Considerations
Still, the risks are clear. Valuation remains a major concern, as the company trades at nearly 19 times sales. Shopify has delivered in the past, but investors assume that growth will continue at a similar clip for years. If e-commerce demand slows or rivals press harder into small-business support, Shopify may not be able to live up to the lofty expectations.
What balances that concern is the strength of Shopify’s financial position. The AI stock has $5.8 billion in cash and just over $1 billion in debt, giving it plenty of flexibility to invest in AI and logistics. Its platform is also trusted by businesses ranging from first-time entrepreneurs to big global brands, giving it a wide base that isn’t easy to disrupt. If the AI boom continues to reshape how businesses operate, Shopify is positioned to be a key provider of that infrastructure.
For Canadians wanting to capture AI excitement without holding only U.S. giants, Shopify offers a way to stay in the game. It comes with higher risk given its valuation, but it’s one of the few local companies capable of riding both the e-commerce wave and the AI adoption curve. Long-term investors willing to handle the swings may see Shopify as more than just a tech stock. It could be Canada’s most direct entry point into the global AI story.
Bottom line
Many top AI stocks trade at extreme multiples that outpace fundamentals, with $560 billion invested in the past two years producing only about $35 billion in incremental revenue. Optimism is running ahead of reality, retail investors are flooding in, and some companies are hoarding chips and engineering talent before clear business models exist. At the same time, firms like Shopify generate real profits and invest in long-term infrastructure.
The lesson for investors is that AI is both a boom and bubble. The hype will burn some names, but the survivors could define the next era of business. Shopify has a shot at being one of them.
