Bears don’t need a bad company. They need expectations that are too high, a convincing threat, and enough frightened investors to start heading for the same narrow exit. Shopify (TSX: SHOP) provided all three earlier this year.
The argument sounded reasonable. Artificial intelligence (AI) could make building an online store easier, weaker consumers could spend less, and Shopify stock’s expensive shares left little room for disappointment. The stock had fallen more than 27% in 2026 by early June as investors treated AI as a possible replacement for commerce software.
Then the business responded with considerably better evidence than a confident conference presentation. Shopify stock reported another quarter of rapid growth, rising cash generation, and guidance suggesting the momentum hasn’t finished. The bears weren’t unwise to ask questions. They were early in declaring the answers.
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Numbers don’t lie
Second-quarter revenue increased 34% year over year to US$3.58 billion. Gross merchandise volume (GMV), representing sales completed through Shopify stock’s platform, climbed 32% to US$115.57 billion. The free cash flow margin reached 18%, indicating that growth is increasingly generating cash rather than merely a longer list of adjusted expenses.
The results surpassed expectations, and Shopify stock projected low-30% revenue growth for the third quarter. Its Toronto-listed shares surged more than 18% after the announcement. That wasn’t simply investors becoming excitable before breakfast. Shopify stock delivered evidence that merchants were still joining, selling, and adopting more services.
A single quarter can’t settle a long-term debate, although two consecutive quarters of 34% revenue growth make the slowdown argument considerably harder to maintain. Investors evaluating Canadian growth stocks should look for exactly this combination: expanding demand, operating leverage, and management guidance supported by current results.
AI expansion
Shopify stock is often described as subscription software, yet subscriptions produce only about one-fifth of revenue. Merchant Solutions, including payments, financing, shipping, and transaction-related services, generated US$2.78 billion in the quarter after growing 37%.
That distinction weakens the idea that an AI-generated website automatically replaces Shopify stock. A merchant still needs products, checkout, payments, fraud protection, inventory connections, and order management. AI shopping agents could create more places where purchases begin, while Shopify stock supplies the infrastructure that helps them finish.
International expansion, larger enterprise clients, point-of-sale adoption, and more services used by each merchant provide additional growth routes. Shopify stock also entered the year with US$5.8 billion in cash and marketable securities and no debt, allowing this member of the Canadian technology stock club to invest without a lender supervising every ambitious idea.
$7,000 in growth
At a recent price of $215.10, a $7,000 investment would purchase 32 full shares for $6,883.20. The table below shows what that position could theoretically become after five years at several average annual returns.
| AVERAGE ANNUAL RETURN | INITIAL INVESTMENT | VALUE AFTER FIVE YEARS | TOTAL GAIN |
|---|---|---|---|
| 10% | $6,883.20 | $11,085.46 | $4,202.26 |
| 15% | $6,883.20 | $13,844.57 | $6,961.37 |
| 20% | $6,883.20 | $17,127.60 | $10,244.40 |
Those are scenarios, not predictions. Shopify stock’s revenue is projected to compound by approximately 24% annually over five years, but share prices don’t have to match revenue growth. The valuation investors pay can expand, contract, or spend several years behaving like a cat that has been asked to enter its carrier.
Near $215, Shopify stock trades slightly above a $204 fair-value estimate and at approximately 11 times forecast 2026 enterprise value to sales. Competition from commerce tools remains real. Small-business customers are also sensitive to recessions, while another expensive expansion outside Shopify stock’s strengths could repeat its bruising logistics adventure.
Bottom line
I wouldn’t chase the entire position after the post-earnings jump. I’d buy gradually, leaving room for volatility while the company proves that 30%-range growth can persist.
The bears have already been proven wrong about an immediate collapse in growth and AI making Shopify stock irrelevant. They could still be right that investors occasionally pay too much. The business, however, is producing more volume, revenue, and cash at an enormous scale. I don’t think that growth story is finished.
