Shopify executives believe AI chatbots will drive deeper commercial activity for online merchants.Sean Kilpatrick/The Canadian Press
Add Shopify Inc. SHOP-T to the list of Canadian stocks that are being battered over fears of disruption from artificial intelligence. But what if these fears are misplaced?
Within the blue-chip S&P/TSX 60 Index, the five biggest laggards so far in 2026 all bear the scars of an AI drubbing, as investors envision chatbots displacing current software.
Shopify, Constellation Software Inc. CSU-T, Open Text Corp. OTEX-T, Thomson Reuters Corp. TRI-T and CGI Group Inc. GIB-A-T are down by an average of nearly 24 per cent each this year, as of Friday morning. Shopify briefly lagged the five laggards earlier this week before the stock regained some lost ground.
For Shopify, which helps small and mid-sized merchants sell online with a broad suite of products and services, the threat from AI may appear large: If chatbots can lead consumers directly to merchants, Shopify could be sidelined.
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Investors are clearly rattled. This is a company that has at times vied with Royal Bank of Canada as the country’s most valuable public company, based on the total value of outstanding shares – underscoring its vaunted success as a global growth story.
Shopify’s market capitalization lags RBC by by $100-billion, or 31 per cent, as of Friday.
More importantly, the downturn is a snub to executives’ insistence that the company is anything but a casualty of AI.
They believe that the technology will drive deeper online commercial activity for online merchants as shoppers – armed with chatbots such as ChatGPT or Gemini – find their way to Shopify-powered storefronts.
Shopify is encouraging this crossover with chatbots. In January, the company announced that it had co-developed with Google the infrastructure – called the universal commerce protocol – that can smooth out the entire online shopping experience.
“Shopify is foundational in powering the commerce layer of the AI era, and we’re just getting started,” Harley Finkelstein, president of Shopify, said during a conference call with analysts on Feb. 11.
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Judging from the share price and tumbling valuation, though, investors aren’t buying these assurances – even as a number of experts have rushed to the defence of the beleaguered software sector in recent weeks.
Dan Ives, an analyst at Wedbush Securities, believes that the AI threat to the software sector is one of several wrong-headed tech trades he has seen over the past 25 years where investors bet wrong.
“The AI trade has been the ‘fear of the unknown’ for the tech and software sector in particular. For the bulls, it’s like fighting a ghost,” Mr. Ives said in a note last week.
Jensen Huang, Nvidia Corp.’s chief executive officer and a key architect of the AI boom, argued earlier this month that fears of AI disrupting the software industry is “the most illogical thing in the world.”
That should put Shopify on the radar screens of investors looking for growth stocks that are now on sale.
Okay, Shopify can’t be called cheap. The shares trade at 66 times estimated earnings, according to S&P Global Market Intelligence. That’s down from a price-to-earnings ratio of 96 at the end of 2025, but clearly still elevated even for a tech stock.
Mighty Nvidia NVDA-T, for example, trades at a significantly lower multiple of 25 times estimated earnings.
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Looking at Shopify from the perspective of estimated revenues, the stock is also expensive – even though its price-to-sales ratio has declined to 10.3, down from over 15 at the end of 2025.
If you’re waiting for Shopify to fall to levels that are broadly recognized as a screaming bargain, the sidelines are probably for you.
Nonetheless, Shopify is enticing for a couple of reasons.
First, it has undeniably strong growth prospects that help explain the heady valuation. In 2025, revenue increased by 30 per cent, year-over-year, to US$11.6-billion.
That marks an acceleration from 25-per-cent growth in 2024. Shopify has doubled its revenues in just three years.
The bullish case for the stock rests on Shopify continuing to expand at a brisk clip as it carves out a bigger share of the world’s massive e-commerce market and grows into a valuation that is now well off its highs.
The other reason the stock is enticing: Widespread concerns that AI is a threat are perhaps overstated or flat-out wrong.
“We view the selloff as overdone,” Todd Coupland, an analyst at CIBC Capital Markets, said in a note.
“Shopify’s scale, data advantage and integration with OpenAI, Gemini and Copilot position the company to benefit rather than be displaced by them,” he added.
Wagering that AI will boost Shopify’s appeal, rather than tarnish it, looks like a wild bet right now. But that’s also what makes the stock appealing.