Shares of Shopify (TSX: SHOP) really do look hungry for the crown of Canada’s largest company by market cap. While time will tell if the race could get closer going into year’s end (bank earnings season has really been fireworks), I think that the e-commerce darling stands out as one of the best high-tech bets for the next two to three years. Undoubtedly, the artificial intelligence (AI) revolution is in full swing, and Shopify is getting in on the action.
Whether it’s through introducing new AI features or acquiring its way to greater strength (the Molly Studio deal I outlined in a previous piece, I thought, could be one of many small-scale deals to add to the Shopify arsenal). And while shares of SHOP appear to be a tad stretched in late August, I still think the analyst community is right to expect more from the firm as it looks to keep up the good quarters with its AI shot in the arm.
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Too many growth drivers to count!
In many ways, Shopify is the growth story that keeps giving back to investors. With plenty of room for international expansion and a Shop Pay business that I believe has what it takes to edge out the competition, I couldn’t be more bullish on the firm’s share-taking potential.
Add fancy, time-saving offerings like Shopify Magic, Flow, and more into the equation, and it’s clear Shopify is more than just an e-commerce platform specializing in small- and medium-sized businesses (SMBs).
The Shopify Plus ecosystem could be made that much more promising through the eyes of the larger firms that are eager to unlock new AI capabilities that Canada’s tech darling will be able to bring to the table. Indeed, if Shopify can keep building those tools, I suspect that the big fish will really start to flow in as AI-driven personalization and the rise of augmented and virtual reality (AR and VR) nudges the e-commerce platform creators into a new frontier of growth.
Although AI, VR, and similar technologies could take many years (even decades) to live up to their potential, I believe that investors with a lengthy time horizon will want to stick with Shopify as it looks to slowly and steadily push such technologies forward and into the mainstream.
It’s about more than AI
Indeed, we’ve heard so much about Shopify and its grand AI plans. But what many investors may be heavily discounting, I think, is the company’s move into the 3D realm. Yes, I know, nobody talks about the metaverse as much anymore. However, I do think AI can help give the nascent technology a much-needed spark.
With VR and AR toolkits that can allow merchants to affordably open up spatial shopping experiences, Shopify seems to have its ticket purchased to the so-called metaverse race. Of course, the metaverse isn’t talked about as much these days — not while investors grow excited over AI’s potential to drive productivity growth across the economy. Either way, when the VR, AR, and the metaverse are ready to make the next big step, Shopify will be ready to go.
As Shopify finds the perfect mix of AI-driven automation and augmentation, I view Shopify as a high-growth company that may one day breach the $500 billion market cap mark.
Shopify’s a great long-term growth bet, but the near term is uncertain
A bear market may not be far away, and if it knocks SHOP stock off its podium, perhaps there’s an opportunity to initiate or add to a long-term position. In short, Shopify is a great long-term buy. As for the near term, it’s tough to tell, given the tremendous volatility (mind the high 2.63 beta) and somewhat frothy valuation, which may have some on pause.
