By Deborah Mary Sophia
Feb 11 (Reuters) – Canada’s Shopify forecast quarterly revenue well above Wall Street expectations on Wednesday, as the e-commerce platform benefits from increased focus on artificial intelligence, and resilient consumer spending despite tariff woes and rising prices.
Higher-income households have helped U.S. consumer demand withstand Trump’s tariffs, rising living costs, and labor-market concerns, allowing retailers to post solid holiday-quarter sales heading into 2026.
Shopify saw strength across all merchant sizes and regions in the holiday quarter.
Still, the company’s investments in international expansion, artificial intelligence tools, and higher marketing expenses dented profits. Its adjusted per-share earnings of 48 cents missed estimates of 51 cents, and the company’s forecast of a drop in free cash flow margins spooked investors.
Shares of the Ontario-based company fell 10%, erasing advances seen in premarket trading. The shares were also hit by poor market sentiment towards software stocks, as new AI tools have cast doubts on the sector’s long-term prospects.
“This was an excellent result for Shopify. They are now massive share gainers in online retail and that seems to be speeding up… The only counterweight to this result is more indiscriminate selling of software stocks that has nothing to do with Shopify,” said D.A. Davidson analyst Gil Luria.
The company also announced a new share buyback plan of up to $2 billion.
‘AI ERA HAS NOW REACHED COMMERCE’
Shopify’s investments in AI tools to help sellers with business tasks have helped it attract both small-scale entrepreneurs and larger retailers. In the fourth quarter, it signed on several large customers such as General Motors, L’Oreal, and Balenciaga.
The e-commerce firm has also partnered with OpenAI to allow consumers to make purchases directly through ChatGPT.
“The AI era has now reached commerce, and you’re seeing the start of this new normal,” Shopify President Harley Finkelstein said on a post-earnings call.
“(We’ve talked about) helping merchants sell everywhere and to operate smarter… That is still our focus in 2026, but it is now being supercharged by AI.”
Orders coming to Shopify stores from AI search queries have risen 15-fold since January 2025, he added.
Shopify expects revenue to rise at a low-thirties percentage rate in the January-March quarter, compared with a consensus estimate of a 25.2% rise, according to data compiled by LSEG. It reported a better-than-expected 31% jump in holiday quarter revenue.
(Reporting by Deborah Sophia in Bengaluru; Editing by Leroy Leo)
Comments