Shopify Inc (TSX:SH., NYSE:SHOP) delivered strong fourth quarter financial results and provided encouraging guidance for the first quarter of 2026, prompting Jefferies analysts to maintain their ‘Hold’ rating on the stock with a $125 price target.
Shares of Shopify added 9% to trade just shy of this target at about $124 on Wednesday afternoon.
According to Jefferies, the company’s fiscal 2025 year-end filings and management commentary highlighted several key developments. Shopify’s headcount declined by 6% to 7,600 employees, reflecting “AI-driven efficiencies and opex discipline across the platform,” the firm noted. They wrote that management expects the employee base to continue shifting toward high-return functions, with reductions primarily stemming from organic churn rather than a deliberate workforce layoff.
In the Shop Marketplace, app listings increased by 5,000 to 21,000, a 31% year-over-year rise, surpassing the growth seen in 2024. The analysts noted that this growth came despite changes to the developer revenue share model, suggesting the “value of Shop’s network effect” remains a potential tailwind for revenue.
Shopify also included new disclosures regarding AI in its annual report. The company highlighted risks that failing to effectively translate its vision for agentic commerce or integrate AI tools could reduce the platform’s utility relative to competitors.
Jefferies believes that these disclosures “are a testament to the investments in AI across the platform” and noted that Agentic Storefronts are now a key focus of R&D efforts. Shopify also acknowledged risks from potential new entrants and in-house AI solutions, although the platform remains relatively insulated from AI-native competitive displacement.
Additionally, Shopify provided more details on its March 2025 acquisition of Austin-based Vantage Discovery for $59 million in cash. The acquisition is expected to accelerate the development of Shopify’s app and Storefront search offerings, integrating the company’s hybrid search engine architecture and AI-powered multi-vector search APIs.
Marketing expenses also rose in 2025, with total program spend increasing by $242 million, compared with $84 million the prior year. Jefferies highlighted a $15 million decline in affiliate partner payouts, interpreting it as a sign that Shopify is exerting greater leverage across its ecosystem and aligning with a recent partner program restructuring.
Based on the company’s Q4 results and Q1 guidance, Jefferies updated its model for Shopify, raising its full-year 2026 EPS estimates to $1.79, up from $1.63 previously, and noting overall multiple compression in the software sector.