Shopify upgraded to ‘buy' as AI initiatives drive growth and efficiency

Investing.com
Updated
Mitrade
coverImg
Source: Shutterstock

Investing.com -- Loop Capital upgraded   Shopify Inc   (NYSE:SHOP) to "buy" from "hold," citing the company's strategic use of artificial intelligence (AI) to boost merchant tools and streamline internal operations. Brokerage raised its price target for Shopify to $140, reflecting a 23% potential upside.

Shopify's AI-driven tools, such as those under the Shopify Magic suite, are enhancing merchant experiences with features like personalized recommendations, automated email generation, and multilingual blog posts. Internally, the company has leveraged AI for tasks such as real-time sales call support, HR assistance, and accelerating accounting processes, driving productivity gains and cost efficiencies.

“We believe Shopify will be able to grow its revenue at a much faster rate than its operating expenses for the foreseeable future, which will result in operating and free cash flow margin expansion and a higher valuation,” analyst wrote.

Loop Capital highlighted that these innovations are allowing Shopify to grow revenue at a faster pace than expenses, expanding operating and free cash flow margins. This efficiency, coupled with consistent 20%+ annual sales growth, is expected to further boost Shopify’s profitability and valuation.

Shopify's reliance on Google (NASDAQ:GOOGL) Cloud infrastructure has also enabled it to avoid significant AI-related capital expenditures, adding to its competitive edge. Loop sees AI as a key driver of margin expansion and long-term growth for Shopify.

 

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
U.S.' largest memory chips maker Micron raises Q4 forecast to $11B on AI demandMicron has raised its Q4 financial predictions based on a surge in demand for artificial intelligence hardware, with the expectation that the demand wil persist throughout the year.
Author  Cryptopolitan
3 hours ago
Micron has raised its Q4 financial predictions based on a surge in demand for artificial intelligence hardware, with the expectation that the demand wil persist throughout the year.
placeholder
Coinbase eyes record close as analysts raise price target to $510, call company 'Amazon of crypto'Coinbase (COIN) saw a 3% gain, rising to $355 at the close of the market on Wednesday, its highest close since November 2021, following Bernstein analysts raising their price target for the crypto exchange's stock to $510.
Author  FXStreet
3 hours ago
Coinbase (COIN) saw a 3% gain, rising to $355 at the close of the market on Wednesday, its highest close since November 2021, following Bernstein analysts raising their price target for the crypto exchange's stock to $510.
placeholder
Circle stock plunges 15%, analysts predict bearish pressure from key long-term headwindsCircle (CRCL) shares slid 15% on Tuesday following analysts' predictions that declining interest rates and competition from other stablecoin issuers would affect its long-term growth.
Author  FXStreet
Yesterday 01: 17
Circle (CRCL) shares slid 15% on Tuesday following analysts' predictions that declining interest rates and competition from other stablecoin issuers would affect its long-term growth.
placeholder
Nvidia CEO begins stock sales under $865M planNvidia CEO Jensen Huang is selling some of his shares using a pre-approved plan.
Author  Cryptopolitan
Jun 24, Tue
Nvidia CEO Jensen Huang is selling some of his shares using a pre-approved plan.
placeholder
Middle East Tensions Ease, Boosting Stocks and Crypto, Plunging Oil PricesOil prices fell sharply due to a possible ceasefire between Iran and Israel.
Author  Insights
Jun 24, Tue
Oil prices fell sharply due to a possible ceasefire between Iran and Israel.