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Shopify Inc. SHOP-T is poised to see a wave of growth from agentic artificial intelligence, a new trend in e-commerce that has the potential to change the retail industry, analysts say.
Agentic AI allows shoppers to find and buy products online through chatbots such as OpenAI’s ChatGPT. It will bring new customers to e-commerce and will reshape the future of online shopping, Bank of Nova Scotia analyst Kevin Krishnaratne said.
Mr. Krishnaratne upgraded his rating for Shopify’s stock to “outperform,” and his target price to US$200 from US$165. Shopify’s stock, which trades under the symbol SHOP, closed at US$168 on the Nasdaq exchange on Thursday.
It’s the latest analyst vote of confidence for the company, which has posted a string of quarters showing double-digit earnings and revenue growth. The stock is trading near all-time highs reached last fall when Shopify announced a partnership with ChatGPT.
By sourcing and aggregating product reviews, user experience and expert opinions online to deliver recommendations, AI agents could better match products to shoppers, resulting in a “major unlocking of retail dollars,” he said.
How Canada’s Shopify is weaving AI ‘magic’ to pull in merchants
Meanwhile, the large language models that power AI have been found to recommend items that would rank much lower when using traditional search tools, levelling the playing field for smaller retailers, he said – a trend that could benefit many merchants who use Shopify’s platform to host their stores.
“We’ve always said that SHOP should be a core holding; now we’re saying buy the stock,” Mr. Krishnaratne said in a note to investors.
The day before, Royal Bank of Canada analyst Paul Treiber reiterated his “outperform” rating and US$200 target for Shopify, saying the company is “likely a key beneficiary of the transition to next-generation commerce platforms and is just starting to monetize many new offerings.”
Mr. Treiber estimates Shopify’s revenue will grow from US$8.8-billion in 2024 to US$17.9-billion in 2027, with the company growing its margins over time with the help of AI.
In November, D.A. Davidson analyst Gil Luria also raised his target price for the e-commerce company to US$195, calling Shopify’s integration a milestone toward changing the way the internet is monetized, with broad implications for Shopify and other large internet companies.
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In an interview on Thursday, Mr. Luria said that Shopify continues to lead its peers with its rollout of agentic AI.
Aside from Shopify, there are few other major websites where merchants can go to list their products, he said. They include platforms of Walmart Inc. and Amazon.com Inc., but both of those websites also sell the retailer’s own brands, meaning they may be conflicted as to how they allow AI bots to search their marketplaces and make recommendations.
Regardless, numerous companies – including Microsoft Corp., Google and Amazon-backed Anthropic – have developed agents that are already crawling the web to help online shoppers find products.
The implications go beyond Shopify and e-commerce companies, Mr. Luria said. As a result of this shift in consumer behaviour, large language models could be the next major avenue for advertising, giving sellers another place to spend their ad budgets aside from Google.
“The nature of search advertising is going to change very dramatically,” he said. “This is going to be a big challenge for Google, as we transition our behaviour to interacting with the digital world through a chat interface as opposed to a browser interface.”
How platforms such as ChatGPT will integrate advertising without losing user trust, however, is an open question. “That’s what they have to figure out,” Mr. Luria said.
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