Wells Fargo calls this e-commerce stock an 'under-the-radar' AI story
Investors should pick up shares of Shopify as the company continues to innovate in an increasingly AI-powered e-commerce industry, according to Wells Fargo. Analyst Andrew Bauch reiterated his overweight rating on Shopify shares and lifted his price target by $18 to $125, which suggests the stock has about 19% upside ahead. Bauch said Shopify has a strong product portfolio and strategic partnerships in artifical intelligence that will allow it to capture similar market share in "agentic" commerce as it does in traditional U.S. e-commerce. Agentic commerce refers to AI agents acting on behalf of the customer or business in e-commerce transactions such as managing inventory, giving customized recommendations and executing payments and other tasks. "While not typically perceived as an AI play, we believe Shopify's AI efforts are differentiated and can serve as another important growth & efficiency driver for years to come," Bauch wrote in a Friday note to clients, calling the stock an "under-the-radar AI story." "Overall, we see AI as an important piece to the Shopify story, and see the business as well-positioned to ride the wave, rather than getting knocked off course. We're taking our growth and margin estimates up modestly on alleviating tariff risks, and the multiple higher on AI confidence," he added. Shares of Shopify are up nearly 3% this year. The stock took a hit in early May after it reported mixed first-quarter results and issued a weak forecast for the current period. However, shares have jumped roughly 17% over the past month following an announcement that Shopify would be included in the Nasdaq 100 index. SHOP 1Y mountain Shopify stock over the past year. According to Bauch, Shopify can be seen as a "thematic AI story" given that its employees leverage AI internally, it offers differentiated AI-powered merchant solutions and is growing partnerships with leading AI companies such as OpenAI, Meta and Perplexity. Shopify and Meta share a longstanding partnership that allows Shopify retailers to sync their products to a catalog on Meta's Facebook and Instagram platforms, therefore growing their reach and sales opportunities. Shopify merchants can also use Meta's advertising tools to target ads and track their customers. In addition, AI-powered search engine Perplexity last year announced it will use Shopify technology for its AI-powered shopping tool called "Shop like a Pro." "While some may perceive the AI wave as a threat, we see layers of opportunity via use cases, efficiencies, and adoption," Bauch said. The analyst projected a $50 billion dollar gross merchandise value, or GMV, opportunity for agentic commerce by 2030, with roughly 30% growth annually between now and then. That, he said, is similar to the early days of e-commerce.
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