Shopify Inc. (NASDAQ:SHOP) has recently seen its price target revised downwards by Jefferies, from $160 to $125, although the firm has chosen to retain its 'Hold' rating on the stock. This revision comes amidst a broader reevaluation of software sector valuations, which analysts believe are currently facing downward pressure. Despite this adjustment, Shopify showcased robust performance in its fourth-quarter earnings and provided an encouraging outlook for the first quarter of 2026.
The e-commerce platform delivered a strong financial showing in its latest quarterly report, marking the first time the company surpassed $3 billion in revenue. This impressive growth was fueled by significant expansion across various markets. Revenue in North America alone saw a substantial 28% increase, contributing to Shopify's capture of over 14% of the U.S. e-commerce market. The company's international merchant base demonstrated even more vigorous growth, with revenue climbing 36% year-over-year.
Beyond its online achievements, Shopify also reported a strong performance in its offline channels, generating $748 million in revenue, a 27% increase. Gross profit for the full year grew by 24%, with the fourth quarter alone contributing a 25% rise. Operating expenses for the quarter stood at $1 billion, accounting for 29% of the revenue. Furthermore, the company generated an impressive $715 million in free cash flow during the quarter, bringing its full-year free cash flow to $2 billion. In a move to enhance shareholder value, Shopify's board also sanctioned a share buyback program totaling up to $2 billion.
Shopify is renowned for providing a comprehensive suite of tools designed to help businesses of all sizes establish, manage, market, and scale their operations globally. Its offerings span various services, including the sale of themes and applications, advertising opportunities on the Shopify App Store, point-of-sale hardware, shipping label solutions through Shopify Shipping, and Shop Campaigns aimed at buyer acquisition. The company's widespread presence extends across North America, Canada, the Middle East, Europe, Latin America, Africa, and the Asia Pacific region, solidifying its position as a global leader in commerce technology.
Despite Shopify's significant potential as an investment, the current market climate suggests that some artificial intelligence (AI) stocks might offer more attractive upside opportunities with comparatively lower risks. Investors seeking to capitalize on emerging trends, such as the potential impact of Trump-era tariffs and the ongoing onshoring movement, might find greater value in certain overlooked AI enterprises. These companies could be poised for substantial growth, presenting a compelling alternative for those looking to diversify their portfolios beyond established tech giants.