Wall Street is reversing course on Shopify after a 23% year-to-date decline, with Jefferies and Stifel both upgrading the stock to Buy this month on the view that artificial intelligence will expand rather than erode the company's transaction infrastructure.

Jefferies raised its price target to $160 from $140 on July 13, three days after Stifel lifted its target to $150 from $110. The upgrades follow a first quarter in which gross merchandise volume rose 35% to $100.74 billion, revenue climbed 34% to $3.17 billion, operating income jumped 88% and free cash flow reached $476 million at a 15% margin.

Shares nevertheless dropped nearly 16% on May 5 after Shopify forecast high-twenties revenue growth for the second quarter, mid-twenties gross-profit growth and operating expenses equal to 35% to 36% of revenue. The market punished the stock for deceleration and heavier AI spending despite the strong underlying performance.

The selloff assumed AI could help merchants build stores cheaply while shopping agents bypass websites entirely, treating Shopify primarily as storefront software. The new bull case argues commerce still requires structured product data, inventory, payments, fraud protection, taxes, checkout rules and order management, functions Shopify provides beneath the interface whether a purchase begins on a website or through an AI assistant.

Shopify Catalog now structures billions of products from millions of merchants for AI discovery. Its Universal Commerce Protocol, co-developed with Google and backed by a broad group of technology and retail companies, provides a common path from product search to checkout. A free Agentic plan lets businesses on competing platforms place products in the Catalog and transact through Shopify-powered checkout, letting the company capture payment volume without winning a full platform migration.

Early data supports the thesis. AI-generated traffic to Shopify stores increased eightfold in the first quarter, orders originating from AI searches grew nearly thirteenfold, and weekly active stores using the Sidekick assistant more than quadrupled.

Jefferies now sees Shopify becoming infrastructure for agentic commerce, capturing additional GMV while embedding itself more deeply in merchant operations. The next test will be whether the transaction-layer strategy can sustain growth rates that justify a premium valuation after the recent re-rating.