Bank of America has initiated coverage of Shopify with a 'Buy' rating and a $150 price target, signaling strong confidence in the e-commerce giant's future. This optimistic forecast is primarily attributed to Shopify's strategic positioning to capitalize on the burgeoning trend of AI-powered "agentic commerce," alongside its successful global expansion initiatives and growing appeal among large businesses. The financial institution emphasizes that while some investors have voiced concerns about AI disrupting Shopify's market standing, the company is, in fact, poised to significantly gain from this technological shift, leveraging its robust payment and checkout infrastructure.
The $150 price target established by Bank of America is rooted in a valuation methodology that considers 22 times Shopify's estimated calendar year 2027 enterprise value to gross profit. This approach highlights the anticipated substantial growth in agentic commerce, where Shopify's foundational role in transaction and infrastructure layers will become increasingly vital. The firm's analysis counters the prevailing investor apprehension, asserting that Shopify's robust platform is designed to integrate seamlessly with AI-native shopping experiences, making it a pivotal player rather than a sidelined victim of innovation.
Beyond the AI-driven opportunities, Bank of America also underscored Shopify's impressive international growth and its successful penetration into the enterprise market as key long-term growth accelerators. The report noted a remarkable 45% year-over-year increase in international gross merchandise volume during the first quarter of fiscal year 2026, with payments volume outside the U.S. surging by over 70%. Currently, non-U.S. revenue constitutes a significant 37% of Shopify's total revenue, demonstrating its global reach and diversification. Furthermore, the analyst pointed to sustained momentum among enterprise clients, specifically highlighting that merchants generating over $25 million in gross merchandise volume are exhibiting the fastest growth rates, and Shopify Plus revenue has seen a healthy 20% year-over-year increase.
Looking ahead, Bank of America projects Shopify's revenue to grow between 24% and 28% from fiscal year 2026 through 2028. Gross margins are expected to stabilize in the mid-to-high 40% range. Critically, operating margins are forecast to expand from 17.1% in 2025 to an impressive 20.5% in 2028, with free cash flow margins also anticipated to rise from 17.4% to 20.3% within the same timeframe. The firm acknowledges that Shopify's payments-centric business model inherently leads to lower gross margins, which is why valuing it based on enterprise value to gross profit is deemed more appropriate. The assigned target multiple of 22 times surpasses the peer group average of 18.1 times, reflecting confidence in Shopify's accelerated growth trajectory and anticipated margin improvements. On Wednesday, following this news, Shopify's shares were observed trading at $115, experiencing a 5% decrease.
Bank of America's reinstated 'Buy' rating for Shopify, coupled with a $150 price target, underscores the company's strong potential to lead in the evolving e-commerce landscape. The confidence stems from Shopify's anticipated benefits from AI-powered commerce, its successful international expansion, and increasing adoption by large businesses. These factors are expected to drive significant revenue growth and margin expansion in the coming years, positioning Shopify as a key player in the global digital economy.