Shopify Was Supposed to Be an AI Casualty. Its AI-Referred Traffic Just Tripled.

The bear case on Shopify (NASDAQ: SHOP) over the past year has been simple. If artificial intelligence (AI) agents start doing the shopping, they could come between merchants and their customers, cutting the e-commerce platform behind those merchants' storefronts out of the transaction. Coming into this week's report, shares sat about 32% below their 52-week high.

Then the company reported its second quarter on Wednesday. AI-referred traffic to merchants' storefronts tripled year over year. Orders that began with an AI search tripled, too. And new buyers arriving through AI channels placed orders at nearly twice the rate of other channels.

In short, the technology that was supposed to cut Shopify out is, so far, sending it customers. The market noticed, and shares jumped about 17% on the report, to about $144 as of this writing.

So, was the AI-casualty thesis simply wrong?

Image source: Getty Images.

What the quarter showed

The AI figures came on top of a quarter that was strong in the ordinary ways. Revenue rose 34% year over year to $3.6 billion, matching the first quarter's pace. Gross merchandise volume (GMV), the total value of goods sold across Shopify's platform, reached $115.6 billion, up 32% year over year and up from $100.7 billion just one quarter earlier. Operating income climbed 68% to $488 million. And free cash flow was $654 million, with the margin expanding to 18% from 15% in the first quarter.

"This was a monster quarter," president Harley Finkelstein said in the earnings release.

The AI detail is what makes this report different, though. Half of AI-referred sessions land directly on a product page (2.5 times the rate of traditional search, the company said), meaning these shoppers arrive closer to a purchase. What's more, 75% of AI-attributed purchases came from outside the top 100 product categories, a sign the traffic is reaching niche merchants, not just the biggest brands.

The new-buyer figure matters most to me. Merchants pay Shopify to help them find customers. And a channel that delivers first-time buyers at nearly twice the usual rate gives merchants one more reason to stay.

Shopify is also building for the agents directly. AI search powered by the company's product catalog converts at twice the rate of AI search built on scraped data, according to the company. And Sidekick, Shopify's AI assistant for merchants, saw daily active merchants grow 3.6 times year over year.

The old channel isn't shrinking either. Finkelstein said traditional search sessions have grown 1.3 times over the past two years and still account for about a third of storefront sessions. AI traffic is coming on top of search, not instead of it.

How big the AI channel actually is

What Shopify didn't disclose is how much money the AI channel drives. The company gave growth rates (tripled, twice the rate) but no dollar figure for AI-referred GMV and no share of the $115.6 billion total.

Of course, growth rates like these usually sit on small bases. Traffic that triples from a sliver is still a sliver. These numbers are an early indicator, not the thing paying the bills. And the channel isn't Shopify's to control. The agents belong to other companies, and the terms of that traffic could change.

Still, the core business is why the AI debate matters less than it might seem. Revenue growth stepped up from 27% in early 2025 to 34% in each of this year's first two quarters, and management guided third-quarter revenue to grow at a low-thirties percentage rate year over year, so it expects only a slight step down this quarter. Monthly recurring revenue reached $221 million, up from $212 million one quarter earlier. Whatever AI shopping becomes, the business underneath it is compounding at scale.

That leaves the price. After the jump, shares trade at about 70 times forward earnings. That multiple was arguably harder to defend when the AI-casualty worry hung over the business, and this quarter took a lot of that worry off the table. But it also means the growth has to keep coming.

So, does the quarter make the growth stock worth buying at this new price? If I owned it, I wouldn't sell after a report like this one. I think it answered the year's biggest doubt about the business. But calling it a buy probably isn't wise, either. At its high valuation, the price now arguably reflects the good news that arrived this week. I'd wait for a better entry point.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.