The tech sector has been moving through quite a hurricane in recent months, and even Canadian e-commerce innovator Shopify (TSX: SHOP) hasn’t been able to avoid getting pulled lower, now down 17% after a swift return into bear market territory.
Indeed, shares of Shopify have not been a smooth ride, with serious double-digit percentage plunges coming every couple of months or so. What’s most important is that shares have found a way to bounce back and, ultimately, find a way higher.
At the end of the day, it’s more about where one ends up than how windy the road is to get there. And for longer-term investors, I do think that sector-side upsets, like the one that’s been going on of late with the AI names, might create opportunities to get more for less.
Of course, it’s only a deal if the fundamentals are intact (or improving) and not in the way of AI’s disruptive impact. Indeed, technology can be a very difficult sector to invest in, given how fast things can change and how rapidly businesses can be disrupted by firms that utilize technologies effectively.
Source: Getty Images
The AI agent tailwind is moving in
In the AI and agentic era, the unpredictability of the tech sector, at least in my view, has levelled up significantly. It’s tough to tell which firms will truly win over the long run from the rise of the technology. The picks-and-shovels used to be the winners, but now that they’re coming in, perhaps the next wave of winners will lie further up the stack, perhaps all the way up to the application layer. At the end of the day, AI needs to be applied to create value and productivity.
When it comes to Shopify, I think it’s a major net beneficiary of the rise of the technology, especially as agentic AI looks to become even more popular for everyday users who are ready for something a bit more useful than chatbots.
And it could stick around for the long haul
In prior pieces, I highlighted the rise of AI agents as a multi-year trend, rather than one that will suddenly send growth in select companies, like Shopify, up by a jaw-dropping amount in the next quarter or two. Indeed, it’s hard to ignore the hype surrounding the latest agentic apps, especially with downloads in the App Store skyrocketing.
Even as downloads and usage look to rise, I’m still not sure how many early users will convert to paying ones and how many trust their agent to buy stuff on their behalf. In the earlier days, I think using agents as a merchant discovery tool could give Shopify a nice boost. The Universal Commerce Protocol (UCP) is a solid foundation that could pay growing dividends in this agentic era.
However, in two to three years, I think that agentic commerce could prove an even bigger opportunity for firms like Shopify. It’s hard to tell how quickly the trend of agentic commerce will kick in. Either way, I continue to think that SHOP stock is one of the better ways to play the agentic ascent.
Still ample room to expand
Next, AI and agents are making it easier than ever before to start a digital storefront. As it becomes more intuitive, I’d look for merchant growth to accelerate a bit, especially as the firm looks to expand its reach into international markets while looking to keep attracting bigger fish with its continuously improving enterprise-grade Shopify Plus platform.
Indeed, Shopify is growing quite quickly already, but the growth ceiling remains high, and AI could prove an invaluable tool that helps hasten things considerably. Whether you’re looking at smaller merchants or enterprises, Shopify looks to be winning big on both fronts.
