Shopify could surge thanks to its use of artificial intelligence for merchants, according to Loop Capital. The firm upgraded the e-commerce stock to buy from hold in a Friday note and raised its price target to $140 from $110. Loop’s forecast calls for nearly 23% upside from Thursday’s close. SHOP YTD mountain Shopify stock. Analyst Anthony Chukumba pointed to a looked-over aspect of Shopify’s business, which is using artificial intelligence for merchants as well as internally for efforts like customer service and product support. The company employs a suite of products housed in what it calls Shopify Magic, which was first introduced in 2023. This includes features like automatically generated emails and blog posts. “We believe investors are underappreciating how Shopify is utilizing AI to not only better serve its merchants (most notably, under the Shopify Magic umbrella) but also internally (including in customer support, sales, human resources, and even accounting and finance),” Chukumba said. Chukumba added that Shopify’s use of AI in its merchant tools will allow the company to grow its revenue at a faster pace than its operating expenses “for the foreseeable future.” “We think Shopify will be able to maintain 20%+ growth over the next several years while its operating expenses increase at a much slower rate, which will result in additional operating and free cash flow margin expansion,” Chukumba said. Shopify has advanced 46% in 2024. Nearly 30 analysts covering the stock have a buy or strong buy rating on it, according to LSEG. The average price target, however, indicates upside of just 2.3%.
Loop Capital upgrades SHOP, says investors underappreciate its AI capabilities