In 10 Years, Will You Wish You'd Bought Shopify Stock During This Dip?

Shopify (NASDAQ: SHOP) stock is down about 30% year to date, even though the business continues to grow. Revenue has increased by at least 30% for four consecutive quarters.

That kind of acceleration for a mature e-commerce company may hint at where it's headed over the next decade. It's no coincidence that this growth is happening as more people use AI to browse and research products before buying. That's translating into better sales conversion for merchants, which makes the dip look like a compelling buying opportunity.

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Shopify's AI boost

Shopping can be time-consuming, which is why agentic, AI-powered commerce could be a huge opportunity for Shopify. These autonomous tools can act like personal shopping assistants, helping people browse and research products while saving them time.

Wall Street seems to be lumping Shopify into the broader software bucket it believes is ripe for AI disruption. But the numbers don't lie. Shopify saw a sharp 8x year-over-year increase in AI-driven traffic last quarter.

Shopify is the only online platform that allows users to find and buy products through OpenAI's ChatGPT, Microsoft Copilot, and Alphabet's Google Gemini. Management reported that these channels are driving nearly twice as many orders as other channels.

The competitive moat is intact

Shopify is competitively positioned as the gateway for millions of merchants that use its platform to process payments and manage their online stores. More traffic and transactions for Shopify merchants create deeper insights into purchase behavior. That lets the company roll out new features that help merchants grow.

One example is Shopify's personal AI assistant, Sidekick, trained on the company's and merchants' data. In the first quarter, Shopify said the number of weekly active shops using Sidekick grew four times over the year-ago quarter.

That means AI could widen Shopify's moat. More traffic from ChatGPT and other channels generates more sales data, which can make Sidekick smarter. As Sidekick improves, it can attract more merchants to Shopify, creating a growth flywheel.

This doesn't mean Shopify isn't without risks. No one can know with certainty how AI will shape the competitive landscape in software and e-commerce in the next 10 years. What if OpenAI and Google try to capture a larger share of the transaction value generated by their AI models? Payments are a large part of Shopify's merchant services revenue, which is three-quarters of the business.

However, the momentum Shopify is already experiencing could point to a big opportunity. I think it's worth taking advantage of the stock's discount. The recent growth may be an early signal that Shopify will become even more relevant in AI-driven commerce.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Shopify. The Motley Fool has a disclosure policy.