Shopify is the IBD Stock Of The Day as the e-commerce software and services provider breaks out amid easing U.S.-China trade relations. The Canada-based company has been adding artificial intelligence features to its platform, which could provide upside for Shopify stock.
Trump administration trade tariffs have pressured e-commerce and other stocks. U.S. and Chinese officials announced late Tuesday that there's a "framework" to resolve issues regarding rare earths shipments. The talks reportedly have also involved U.S. curbs on AI chips to China.
On the stock market today, Shopify stock rose 3.5% to close at 114.13, clearing a 112.38 buy point from a cup-with-handle base.
With Wednesday's gain, shares are up about 8% in 2025. In 2024, Shopify stock gained 36%.
The relative strength line, which track's a stock's performance vs. the S&P 500, hasn't recovered much from early April lows and has been moving sideways for the past seven months.
Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
Shopify Stock: Lutke AI Letter
In May, Shopify unveiled new AI-powered tools designed to help merchants improve the online shopping experience for their customers. Tools included an "AI store builder."
Shopify also upgraded its AI commerce assistant, with new voice chat and screen sharing capabilities.
In addition, the company said it will enable merchants to share product listing information with AI applications and agents.
As part of its AI push, Shopify in April named Carl Rivera as chief design officer. He had been head of shop and merchant services.
Further, Chief Executive Tobias Lütke in April sent out a companywide letter declaring that effective AI utilization internally will be expected from each Shopify team member.
Wall Street analysts expect Shopify profit margins to improve amid AI-related productivity gains.
"As evidenced by CEO Tobi Lutke's internal memo, the company is aggressively leaning into AI usage, to the tune of essentially forcing employees to prove AI cannot augment additional resources or headcount needed to accomplish tasks at Shopify," said Morgan Stanley analyst Keith Weiss in a report. "As such, management continues to believe headcount will remain largely unchanged on a go forward basis."
New AI Initiatives
Shopify addressed other AI strategic issues on its first quarter earnings call with Wall Street analysts.
"AI is being built into the culture and frankly, built into the DNA of how we operate," said Shopify President Harley Finkelstein.
"It is now a reflex that is expected of our 8,000 people that work with us. So we're really leaning into this.
He noted that Shopify has been working with leading AI model training developers OpenAI and Perplexity.
"We're not going to front-run our product road map when it comes to anything, frankly," Finkelstein added. "But we do think, though, that AI shopping, in particular, is a huge opportunity. And you can expect that Shopify will be wherever consumers are looking to find incredible products."
Shopify Stock: Enterprise Market
While Shopify's roots are in catering to small- and medium-size businesses, it has expanded into the "enterprise" market targeting large companies.
In the enterprise market, competitors include Salesforce, Adobe, and BigCommerce.
Shopify's e-commerce software and services were designed for companies selling products to consumers. But Shopify has expanded into business-to-business (B2B) e-commerce.
In addition, Shopify's e-commerce business has focused on online shoppers. But the company has pushed into "point-of-sale" services in physical retail stores, especially for large merchants.
Lastly, some of Shopify's growth is coming from expansion into Europe.
Technical Ratings
From a technical view, Shopify stock holds an IBD Composite Rating of 97, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Shopify stock has an Accumulation/Distribution Rating of B-.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Fulfillment Unit Sold
Founded in 2004, Shopify launched its initial public offering in 2015. In 2023, the company sold its delivery and logistics business to Flexport, easing investor angst over rising capital spending.
Meanwhile, Shopify stock has a 21-day ATR of 3.53%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
IBD suggests stocks with ATRs of up to 8%.
Additionally, Shopify is among artificial intelligence stocks to watch.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity, quantum computing and cloud computing.
