(NASDAQ:SHOP) reported that surpassed revenue expectations and delivered strong forward guidance, but shares closed down 6% on Feb. 11, 2026, as investors focused on earnings and broader AI-related concerns in the software sector.
Shopify posted revenues of $3.67 billion in the quarter, surpassing the Zacks Consensus Estimate by 2.55%. This compares to year-ago revenues of $2.81 billion. Revenue growth was aided by strong holiday shopping activity.
The Canadian e-commerce company posted adjusted earnings per share of 48 cents, missing the Zacks Consensus Estimate of 50 cents per share, though it came ahead of the year-ago earnings of 44 cents per share.
AI Investments Weigh on Near-Term Margins: Should You Buy the Dip?
The company forecast free-cash-flow margins in the “low-to-mid teens” for the first quarter, slightly below year-ago levels. Chief Financial Officer Jeff Hoffmeister attributed the softer margin outlook to continued investments in artificial intelligence (AI) tools.
Shopify, which sells software to help businesses launch and run their online storefronts, has seen shares slumping this year, with the stock losing as much as 29.2% over the past one month. The recent software stock selloff led by AI fears has hit Shopify hard.
However, Shopify President Finkelstein believes that some fears of an AI-led software rout are exaggerated, emphasizing that companies serving as platforms and infrastructure are better positioned than feature-based providers, as quoted on CNBC.
GMV Surges Above Expectations
Shopify’s gross merchandise volume (GMV), which measures the total value of goods sold through its platform, climbed 29% year over year to $123.8 billion, surpassing analysts’ estimates of $121.3 billion, per FactSet data, as quoted on the same CNBC article.
Improved Outlook & Buyback Program
Shopify expects first-quarter revenue growth in the “low-thirties percentage range” year over year, topping analysts’ projected growth of 25.1%, according to FactSet, as quoted on the above-mentioned CNBC article.
Shopify’s board also approved a $2 billion share repurchase program. A buyback program generally indicates management confidence over its own stock. The stock is not too debt-heavy. While these factors are positive for investing in SHOP, the valuation of the stock is pretty rich — a point of concern.
Inside the Valuation
The stock trades at a price/earnings ratio of 92.20X on a trailing-twelve-month basis, versus 28.44X multiple recorded by the Internet – Services industry. Price-to-book ratio is also elevated at 13.24X versus 1.97X multiple possessed by the underlying industry.
ETFs in Focus
Against this backdrop, investors can keep a track of Shopify-heavy ETFs like ARK Blockchain & Fintech Innovation ETF (ARKF) , and . The basket approach often minimizes the company-specific concentration risks. However, any move in internet and fintech stocks and ETFs demands caution now, as AI-led fears may emerge occasionally. ARKF and FDNI lost more than 3% and 2%, respectively, on Feb. 11, 2026.
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This article originally published on Zacks Investment Research (zacks.com).
