Investing.com -- Bernstein initiated coverage of Shopify at Outperform with a price target of $160, implying over 26% upside from the stock’s Thursday closing price.

Analyst Mark Shmulik calls Shopify an "AI’s optimist," arguing that while the company faces risks from agentic commerce, AI-native alternatives and "vibe coding," these same forces should ultimately expand the market Shopify serves rather than shrink it.

Shopify shares rose 2% in premarket trading Friday by 06:25 ET (10:25 GMT).

Shopify has grown to hold roughly 14% of U.S. e-commerce market share, with more than half of its sellers now based outside the U.S. and 50% of incremental gross merchandise value (GMV) generated outside North America, Shmulik noted. He said the company’s international, physical and B2B channels now account for more than 60% of total sales volume.

On the AI front, the analyst said the risks facing Shopify are "storms in teacups," pointing to strong adoption of Shopify’s product catalog by AI chatbots and merchants’ preference to keep transactions on Shopify’s payment rails for security and fraud management reasons. He highlighted that agentic checkout hype "faded quickly" following a lackluster launch of ChatGPT Checkout.

Bernstein modeled Shopify’s global GMV growing at a roughly 24% compound annual rate (CAGR) from 2025 to 2030, with revenue growing at approximately 25% and free cash flow (FCF) growing faster still, at around 32%, over the same period. The broker’s investment thesis is built on the view that "FCF growth > revenue growth > GMV growth > market growth."

Shmulik acknowledged that Shopify’s gross margins fell 230 basis points year-over-year in 2025, driven primarily by its payments business, including the PayPal partnership and lower enterprise take rates. Still, he sees room for Shopify to eventually monetize its AI tools, noting active storefronts using its Sidekick AI assistant were up four times year-over-year in the first quarter of 2026.

Shopify currently trades at 9 times 2027 revenue and a 45 times 2027 FCF multiple, below its historical range of 10-12 times forward revenue and roughly 70 times FCF.

"Ignore the noise, this is your AI-enabled entry point," Shmulik wrote.