Shopify Shares Rise 42% in a Year: Will the Rally Continue in 2026?

Shopify SHOP shares have returned 41.6% in the trailing 12-month period, outperforming the broader Zacks Computer and Technology sector’s rise of 20.4%. The outperformance can be attributed to Shopify’s consistent results and strong execution. Both Gross Merchandise Value (GMV) and revenues grew 32% in the third quarter of 2025. GMV growth accelerated from 31% growth reported in the previous quarter and 23% growth in the first quarter of 2025. Revenue growth accelerated from 31% growth reported in the previous quarter and 27% in the first quarter of 2025. 

The acceleration in GMV and revenues was driven by an expanding merchant base, a trend that is expected to continue in 2026, driven by Shopify’s merchant-friendly platform and growing AI-powered tools. This, along with steady free cash flow margin (15% in the first quarter of 2025, 16% in the second quarter of 2025 and 18% in the third quarter of 2025), bodes well for investor sentiments in 2026. In fact, fourth-quarter free cash flow is expected to be slightly above the third-quarter 2025’s reported figure.

Shopify shares have also outperformed peers, including Amazon AMZN, Wix.com WIX and Commerce.com CMRC in a year. Amazon, Wix.com and Commerce.com shares have dropped 2.9%, 53% and 37.9%, respectively, over the same timeframe.

SHOP Stock’s Performance

AI Infusion to Aid Shopify’s 2026 Prospects

Shopify hosts a data trove thanks to an expanding merchant base and a growing number of transactions. This whopping amount of data is helping Shopify offer better shopping experiences to merchants and eventually their customers. The company is leveraging agentic commerce to boost shopper experience, beginning with product discovery to conversation and finally checkout through tools like Catalog (product discovery), Universal Cart and Checkout Kit. 

Shopify’s expanding partner base is noteworthy in this regard. The company’s partnership with Perplexity is helping it gain a footprint in conversational shopping, while partners like OpenAI (ChatGPT) and Microsoft (CoPilot) are helping to smooth out in-chat shopping flows. Shopify’s AI-powered post-purchase tools are helping merchants build long-term, durable relationships with shoppers. Growing adoption of Sidekick, Shopify’s on-platform intelligent assistant, reflects the company’s expanding footprint among AI-first merchants.

Expanding International Footprint Aids SHOP’s Prospects

Shopify’s growing international footprint is a key catalyst. International GMV grew 41% year over year in the third quarter of 2025, with Europe leading the charge (21% of revenues). Shopify Capital is now available in Germany, the Netherlands, Ireland, and Spain, providing more merchants with access to growth funding. In the third quarter of 2025, Shopify Payments penetration gains were more than 50% higher than the gains in the year-ago quarter in Europe. 

Shopify also launched Shopify Payments for POS to three additional countries and rolled out Tap to Pay in seven more countries in the third quarter of 2025. Shop App also expanded Track with Shop and Translations in six new markets in the third quarter of 2025, making it a top destination for local buyers globally.

Shopify’s expanding partner base is expected to further boost its international footprint. In the third quarter of 2025, the company partnered with Amazon, Big Blue, DHL Fulfillment Network, Go Bolt and Maple to give merchants more fulfillment flexibility. The deals with Australia Post, Royal Mail and DHL Express Canada now offer more carrier diversity, while the launch of DHL Express DDP, DHL e-commerce DDP and the enablement of Canada Post DDP help merchants easily collect duties at checkout.

SHOP’s 2025 Earnings Estimates Revisions Are Steady

The Zacks Consensus Estimate for SHOP’s 2025 earnings is currently pegged at $1.45 per share, unchanged over the past 30 days and indicating year-over-year growth of 11.54%. The consensus mark for SHOP’s 2025 revenues is currently pegged at $11.45 billion, implying a year-over-year rally of 29%.
 

Shopify Inc. Price and Consensus

Shopify Inc. price-consensus-chart | Shopify Inc. Quote

The Zacks Consensus Estimate for 2025 Merchant Solutions’ revenues is currently pegged at $8.70 billion, suggesting 33.3% growth from 2024’s reported figure. The consensus mark for Subscription solutions revenues for 2025 is currently pegged at $2.75 billion, indicating 17.1% growth from the 2024 reported figure.

Shopify: Stretched Valuation is a Risk for Investors

Shopify shares are currently overvalued, as suggested by the Value Score of F. The stock is trading at a premium, with a forward 12-month price/sales (P/S) of 15.43X compared with the Zacks Computer and Technology sector’s 6.62X and the Zacks Internet Services industry’s 7.53X.

Shopify is trading at a significant premium compared with its peers. In terms of forward 12-month P/S, Amazon, Wix.com and Commerce.com are currently trading at 3.06X, 2.53X and 0.98X, respectively.

SHOP Valuation

Here’s Why Shopify Stock Is a Hold

SHOP is benefiting from strong growth in its merchant base and an expanding international footprint. Based on these factors, Shopify expects revenues for the fourth quarter of 2025 to grow at a mid-to-high twenties percentage rate on a year-over-year basis. 

However, gross margin is expected to suffer from a higher mix of low-margin Merchant Solutions revenues and the negative impact of rapid Payments penetration. These factors, along with a stretched valuation, don’t bode well for prospective investors in the near term. 

Shopify currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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