TLDRs;
- Software stocks fall on fears that AI could erode profits and disrupt traditional business models.
- Market sentiment is split as AI worries clash with optimistic company fundamentals.
- Investors focus on GMV trends, costs, and AI expansion ahead of Shopify’s earnings.
- Shopify’s high-beta stock could see sharp moves as investors react to management signals and AI risks.
Shopify (NYSE: SHOP) shares slipped 4.4% to $114.02 in after-hours trading Wednesday, marking a turbulent session that saw the stock fluctuate between $110.00 and $120.01 on heavy volume of roughly 20.8 million shares.
The decline comes amid growing concerns that rapid advances in artificial intelligence could disrupt software pricing and profit margins just days ahead of the company’s fourth-quarter and full-year 2025 earnings report, scheduled for February 11.
Software Sector Faces AI Pressure
Investors are taking a cautious stance across the software and technology sectors, trimming positions as AI innovations spark uncertainty. Analysts and market strategists have flagged that emerging AI tools may undercut traditional revenue streams, potentially pressuring Shopify and peers such as Salesforce, Datadog, and Adobe.
Art Hogan, chief market strategist at B. Riley Wealth, commented, “We’re looking at a lot of software names that are seen as companies that may well be disrupted.”
This broad-based selloff reflects growing skepticism about how AI will affect pricing power and profit sustainability in software companies, even those with strong fundamentals like Shopify.
Mixed Investor Sentiment
Despite the cautious mood, not all experts agree that AI poses an immediate threat to Shopify. Nvidia CEO Jensen Huang dismissed the idea that AI will replace software companies as “illogical,” suggesting that market fears may be overblown.
Still, U.S. equity markets faced headwinds on Wednesday as investors wrestled with the challenge of factoring in the potential risks and returns of heavy AI investment.
John Campbell, senior portfolio manager at Allspring Global Investments, observed, “We’ve got an expensive market and expectations are really high.”
Josh Chastant, portfolio manager at GuideStone Funds, also admitted a bearish stance on software in general, highlighting broader sector caution.
Shopify Earnings in Focus
Shopify’s upcoming earnings report will be closely scrutinized for several key metrics. Analysts and investors will focus on gross merchandise value (GMV) trends over the holiday quarter, the impact on payments and merchant services, and the company’s ability to manage expenses while expanding AI initiatives and offline retail operations.
Jefferies analyst Samad Samana maintained a Hold rating with a $160 price target on Shopify, citing third-party data suggesting that GMV could beat consensus expectations. This implies that Shopify’s core business performance may remain robust despite sector-wide concerns about AI disruptions.
High-Beta Moves Could Persist
Shopify’s stock has exhibited high-beta behavior in recent sessions, swinging sharply in response to both macro and sector-specific news. Analysts caution that if management signals any concerns regarding consumer demand, merchant growth, or expense pressures, sellers could accelerate their positions, particularly if broader software stock selloffs continue.
The Feb. 11 earnings call will provide the market with the first detailed outlook for Shopify in 2026, setting the tone for how investors perceive AI’s potential impact on the company and the wider tech sector. With heightened volatility and AI-related uncertainty, Shopify remains in the spotlight as traders weigh risk versus potential reward.
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