Shopify (SHOP) Stock: Drops 7% Despite Strong Earnings And AI Push

TLDR

• Shopify drops 6.7% as earnings miss overshadows revenue beat and AI growth
• Strong holiday sales and AI momentum fail to stop Shopify stock slide
• Shopify revenue beats, but profit miss triggers sharp selloff
• AI commerce growth accelerates while Shopify shares fall
• Buyback plan announced as Shopify stock sinks after results

Shopify (SHOP) shares closed lower after a sharp late decline erased earlier gains and signaled pressure across software names. The stock ended at $118.71, down 6.70%, as markets reacted to its outlook and sector weakness. Yet the company reported strong fourth-quarter results and projected firm momentum for early 2026.

Shopify Inc., SHOP

Solid revenue beat lifts outlook but fails to support shares

Shopify posted higher quarterly revenue and exceeded expectations despite a weaker adjusted earnings figure. The company reported $3.67 billion in revenue, which surpassed analyst estimates and marked strong year-end growth. Its adjusted earnings reached 48 cents per share, which missed consensus expectations and limited upside sentiment.

The firm guided for low-thirties percentage revenue growth in the first quarter, which exceeded market forecasts. This projection suggested continued expansion across merchant activity and platform spending despite broader market uncertainty. Yet the company noted its free-cash-flow margin would ease due to rising investment in new tools.

The board approved a $2 billion share repurchase plan, which aligned with capital return priorities. This move aimed to improve share metrics and support long-term financial ratios. The news did not change the stock’s downward trading pattern throughout the session.

AI commerce activity accelerates across platform and partner tools

Shopify noted rapid growth in AI-driven shopping activity across its network and partner channels. Orders generated through AI searches rose sharply compared with last year and expanded merchant exposure to new buyers. This shift strengthened platform engagement and supported broader adoption of automated shopping features.

The company highlighted new partnerships with several AI platforms to extend merchant reach and simplify product discovery. These connections enabled shoppers to receive tailored suggestions and complete purchases across multiple digital channels. They increased traffic flow for smaller merchants and supported higher conversion rates.

Shopify continued upgrading its internal AI assistant, which helped merchants analyze performance and adjust store strategies. The tool created custom apps, automations, and task lists that supported operational flexibility. Usage increased quickly after its latest release and reinforced the company’s focus on practical automation.

Holiday momentum boosts revenue base and strengthens platform metrics

The peak holiday period lifted merchant activity and pushed retail volumes higher across the platform. Spending from November to December rose across major categories and exceeded industry expectations. This jump supported revenue gains and aligned with broader e-commerce resilience.

Shopify reported gross merchandise volume of $123.8 billion, which surpassed analyst expectations. This figure represented 29% growth and reflected rising adoption among new and existing sellers. Therefore, the year-end environment helped strengthen core transaction performance.

The company posted quarterly profit of $743 million, which compared with a higher figure in the prior year. Revenue streams from merchant and subscription solutions continued to expand and supported overall results. The company emphasized sustained gains while maintaining profitability as it entered 2026.

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