Shopify Stock: Undervalued or Overvalued?

Shopify's stock has underperformed the S&P 500 over the last five years due to overvaluation, but its business performance remains strong. Q3 revenue rose 32% YoY, with GMV growth of the same rate. The company generated substantial cash flow, with $422mln in free cash flow in Q2 2025 and $507mln in Q3. AI catalysts, such as expanded checkout experiences in popular AI chats, may help maintain growth in 2026. However, with a high price-to-earnings ratio of 100 and a forward price-to-earnings ratio of 73, investors are pricing in rapid growth and significant margin expansion, which may be challenging for Shopify to achieve.