Shares have had a rough 2026, falling about 21% as investors pulled back from software stocks during the so-called “SaaSpocalypse.” The sell-off was fueled by concerns that rapidly advancing AI tools could eventually take market share from traditional software companies. Bernstein analyst Mark Shmulik thinks those fears may be overdone.

Bernstein Sees Shopify as an AI Winner

Shmulik describes Shopify as sitting at the intersection of three major technology markets: e-commerce, software and payments. In his view, AI could ultimately expand the company’s opportunity rather than threaten its business. AI is making it easier for entrepreneurs to launch companies, and those new businesses will still need tools to sell products, accept payments and manage their operations. That puts Shopify in a potentially favorable position.

Shmulik said Shopify is a company he would “circle” as one that could eventually be reclassified as an AI winner, rather than an AI victim. Recent results provide some support for that.

Strong Results Give Investors More Confidence

Shopify’s Q2 2026 earnings report, which it delivered on August 5, showed that the business continues to grow at a rapid pace.

Second-quarter revenue jumped 33.6% year over year to $3.58 billion, beating Wall Street expectations by about $140 million. The company also provided third-quarter revenue guidance above consensus estimates.

Gross merchandise volume, or GMV, climbed 32% to $115.6 billion, showing that merchants continued to move significant amounts of business through Shopify’s platform.

Other financial metrics were strong as well:

• Monthly recurring revenue increased to $221 million, up from $185 million
• Free cash flow reached $654 million, representing an 18% margin.
• Operating income rose to $488 million, compared with $291 million a year earlier.
• Net income increased to $1.50 billion, up from $906 million.

Shopify President Harley Finkelstein also pointed to AI as an opportunity for the company, saying that the technology is expanding what merchants can do through the platform.

Rosenblatt Is Bullish, Too 

Bernstein isn’t the only Wall Street firm taking a bullish position.

Rosenblatt also recently initiated coverage of SHOP with a Buy rating and a $175 price target. 

Analyst Scott Devitt called Shopify a dominant e-commerce software platform serving everyone from smaller merchants to major enterprise brands.

Rosenblatt also sees two areas of the company’s business as particularly underappreciated: B2B commerce and international expansion. Both could provide Shopify with additional room to grow as the company moves beyond its traditional base of online merchants.

The firm also pointed to Shopify’s free cash flow generation and operating leverage as positives. As revenue continues to grow, the company has been able to convert more of that growth into cash flow.

AI Could Actually Strengthen Shopify’s Position

One of the more interesting parts of the SHOP bull case is the company’s push into agentic commerce, a future in which AI assistants help consumers discover products and complete purchases. Rosenblatt argues that even if AI changes how shoppers find products, those transactions will still need infrastructure to handle catalogs, payments and checkout.

Shopify is positioning itself to be part of that infrastructure. The company co-developed the Universal Commerce Protocol with Google, while its Shop Pay system provides a checkout layer designed to work within emerging AI-powered shopping experiences.

So, What’s Next for Shopify?

Shopify expects Q3 revenue to increase at a low-thirties percentage rate year over year. Gross profit dollars are expected to grow at a mid-twenties percentage rate. That means the company is still forecasting growth at a pace that would be impressive for a business of Shopify’s size. The bigger question for investors is whether the market will continue to view SHOP as a software company threatened by AI or as a beneficiary of the AI story.

During the second quarter, SHOP’s net income came in at $1.5 billion, or $1.16 per share. That’s a significant increase from $906 million, or 69 cents per share, during the same period last year. Adjusted for one-time expenses, the company reported earnings of 42 cents per share. Analysts expected adjusted earnings of 40 cents per share.

Revenue also came in higher than forecast. Total revenue reached $3.58 billion, up from $2.68 billion a year earlier. Analysts had predicted revenue would reach about $3.45 billion, making Shopify’s results another positive surprise.

Growth Across Both Business Segments

The company’s growth was fueled by strong performances in both of its primary business segments: Subscription Solutions and Merchant Solutions.

Subscription Solutions, which includes monthly plans and software tools that businesses use to operate their online stores, generated $802 million in revenue during the quarter. That’s solid growth compared with $656 million in the same quarter last year.

Even stronger was Merchant Solutions, Shopify’s largest source of revenue. This division includes payment processing, shipping services, financing, and other tools that help merchants manage their businesses. Revenue from Merchant Solutions climbed to $2.78 billion, up from $2.02 billion a year earlier.

Another important measure of the company’s success is Gross Merchandise Volume (GMV), which jumped to $115.57 billion during the second quarter, compared with $87.84 billion year over year. The increase in GMV indicates that consumers continued spending through Shopify-powered stores despite ongoing economic uncertainty. 

Investors also received encouraging guidance for the months ahead. 

SHOP expects revenue in the third quarter to grow at a low-thirties percentage rate compared with the same period last year. The company also expects gross profit dollars to increase at a mid-to-high twenties percentage rate, suggesting management remains confident about continued demand.

At the same time, the company plans to keep operating expenses under control. The company expects operating expenses to represent between 33% and 34% of revenue during the third quarter. Maintaining disciplined spending while growing revenue could help support continued profitability.

Building a Broader E-Commerce Platform

In addition, Shopify has spent the past several years expanding beyond its original online storefront business. Today, the company offers payment processing, fulfillment tools, financing options, marketing features, and other services designed to help merchants manage every aspect of their businesses from a single platform.

That strategy appears to be paying off. As merchants adopt more Shopify products, the company generates additional recurring revenue while strengthening customer loyalty.

The latest results also demonstrate SHOP’s ability to outperform market expectations. Beating analyst forecasts on both earnings and revenue is often viewed positively by investors because it signals stronger-than-expected business performance.

Bottom Line for Shopify

With revenue climbing more than $900 million year over year, profit rising sharply, and merchandise sales reaching record levels, Shopify has considerable momentum. If the company delivers on its third-quarter outlook, it could continue rocketing even higher.

Overall, Shopify’s continued growth in online commerce, increasing merchant activity, and greater adoption of its expanding suite of business services make the stock even more attractive. Strong financial results, healthy sales growth, and optimistic guidance suggest the company remains well-positioned for the remainder of the year.

Most of the AI-and-jobs conversation focuses on headcount. That narrative is real, but it’s only half the picture. The other half is happening inside corporate IT budgets, where companies are quietly building their own AI-powered tools to do what Microsoft, IBM, Oracle, and Salesforce used to do for them. It’s less visible than a layoff announcement, but the dollar figures involved are just as large, and in some cases larger.

Call it hiring AI as the new consultant. Instead of paying a vendor’s subscription fee or a systems integrator’s hourly rate, these companies are pointing internal engineering teams, aided by AI coding tools, at the enterprise software they already pay for and asking a simple question: could we build this ourselves, cheaper?

At a moment when every basis point of margin matters to investors, that question is being asked more often and answered “yes” more often than before. Here are four publicly traded companies doing exactly that.

Starbucks Builds AI to Cut $400M in Enterprise Software Costs

Starbucks (NASDAQ: SBUX) spends roughly $400 million a year on software, according to comments its CTO made to employees in an internal forum reviewed by Bloomberg. The company is now building AI-powered replacements for a Microsoft inventory-tracking system and an IBM maintenance-management platform, with internal rollouts possible by late 2027. It’s also been developing homegrown point-of-sale software to eventually replace Oracle Simphony.

The effort ties into a broader $2 billion turnaround plan, and the enterprise technology division is on pace to cut its own budget by about $30 million this fiscal year, roughly a third of that from software specifically.

Klarna Uses AI to Slash Costs, SEC Filings Show

Klarna (NYSE: KLAR) has been the most transparent of the group, disclosing AI-driven savings directly in its IPO filings. An internal AI tool that classifies and routes customer service conversations delivered about $4.9 million in savings over twelve months.

More broadly, the company says AI helped cut sales and marketing costs from $531 million in 2022 to $355 million by mid-2025, including a 75% drop in outside marketing-agency spend. Klarna also runs an internal AI knowledge assistant, called Kiki, and an AI tool that explains credit decisions to support agents, both aimed at reducing reliance on external systems and staff.

Shopify Makes AI Adoption a Hiring Requirement

Shopify’s (NASDAQ: SHOP) version of this shows up as policy, not a product announcement. CEO Tobi Lütke told employees in an internal memo that teams must prove AI can’t do a job before requesting new headcount or resources, calling AI use “a fundamental expectation.” The company built internal tools, including a proxy layer and dozens of connected AI agents, to make that mandate practical rather than aspirational.

The intent isn’t to replace a specific enterprise software vendor the way Starbucks is. It’s using AI to hold headcount and internal tooling spend flat while the business keeps growing, which shows up on the income statement the same way.

IBM Cuts HR Costs With AI, Then Quietly Rehires

IBM (NYSE: IBM) built an internal AI assistant called AskHR to automate routine human resources work: leave requests, payroll questions, and internal paperwork. The company says AskHR now handles about 94% of those interactions without human involvement, contributing to $3.5 billion in productivity savings in 2024 against a $2 billion target.

IBM cut roughly 8,000 HR-related jobs on the strength of that automation, then quietly rehired in some areas after gaps in service quality emerged. It’s a useful reminder that these tools cut costs, but not always as cleanly as the initial announcement suggests.

Does This Actually Move the Needle?

Two caveats are worth noting before you invest in this thesis. First, none of this shows up as its own line item in a 10-Q. Companies don’t break out “software costs” separately from wages, occupancy, or general corporate overhead, and new FASB rules requiring that kind of expense disaggregation don’t take effect for most large filers until fiscal years starting in 2027 or later. Numbers like Starbucks’ $400 million figure come from internal comments reported by journalists, not audited disclosures. Investors are taking management’s word for it.

Second, building this software isn’t free. Industry estimates suggest a mid-sized internal tool that once cost $300,000 and six months to build can now be done for roughly $30,000 to $50,000 in six to eight weeks, thanks to AI-assisted coding.

That’s a real cost reduction, but it’s not zero, and it comes with ongoing maintenance, security, and staffing obligations that don’t disappear once the tool ships. A 2026 survey from Retool found 35% of enterprise teams have already replaced at least one SaaS tool with something custom-built, so this isn’t unique to these four names. But industry-wide, it’s still a fraction of the roughly $674 billion companies spent on enterprise software as of a few years ago.

Why This Trend Is Bigger Than Layoffs

None of these four companies is going to swing its earnings per share on internally built software alone. But that’s exactly the point most of the job-loss coverage misses: this isn’t a one-time event, it’s a slow reallocation of spend away from software vendors and toward internal AI-assisted development, one contract renewal at a time.

For investors watching Microsoft, IBM, Oracle, and Salesforce, the more interesting question may not be who’s building AI products to sell, but which of their own customers are using AI to stop buying.

As with most things in the market, the answer depends on the stock. The market is slumping because investors are concerned about the lofty valuations in many stocks, particularly those having to do with artificial intelligence (AI).  

Is it time to move away from growth stocks? That seems extreme. Look, your portfolio needs growth. And the good news is that you can find growth without investing in AI stocks. There are companies that deliver strong revenue growth backed by equally strong earnings growth.  

In this article, we’re looking at three companies that command premium valuations. However, the key difference is that their fundamentals are catching up. Strong unit economics, expanding operating margins, and disciplined cost management are giving investors renewed confidence that these high-multiple stocks can grow into and potentially exceed their current market prices. 

Shopify: Earnings Growth 
from High-Margin Commerce Infrastructure 

Shopify Inc. (NYSE: SHOP) is transitioning from a hyper-growth e-commerce platform into a more mature, highly profitable infrastructure business for online merchants. The company has streamlined operations after divesting its logistics unit and is now focused on high-margin software and payments revenue.  

The company’s merchant solutions, particularly Shopify Payments and Shop Pay, continue to grow rapidly as merchants consolidate more of their digital operations onto the platform. Operating leverage is improving, and recurring subscription revenue provides stability even in uneven retail environments.  

As of this writing, SHOP stock had a forward price-to-earnings (P/E) ratio of 126x. That’s a premium to the S&P 500, certainly, but it’s also a premium to its historic average.  

However, analysts are forecasting earnings growth of over 30% in the next 12 months. With e-commerce penetration still far from saturated globally, Shopify has a long runway to grow earnings well above current estimates, supporting its elevated valuation. 

Where the Thesis Could Be Wrong

A slowdown in consumer spending would weaken e-commerce trends. That could pressure merchant volumes and limit Shopify’s operating leverage. Additionally, Shopify faces competition from Amazon.com Inc. (NASDAQ: AMZN) as well as niche e-commerce platforms that could make it harder for the company to maintain its current pace of margin expansion. 

DoorDash: Scaling Earnings Growth Through a Broader Delivery Ecosystem 

DoorDash Inc. (NASDAQ: DASH) has evolved far beyond a food-delivery app into a broad-based last-mile logistics platform. Its expanding marketplace now includes groceries, retail, convenience, and even small business delivery, capturing a larger share of consumer spending.  

The company continues to deliver strong order growth while simultaneously improving contribution profit per order. This is clear evidence that its unit economics are stabilizing. 

DASH stock has a forward P/E ratio of around 96x. However, analysts project 69% earnings growth in the next 12 months. If that’s the case, the source of that growth may come outside the United States. DoorDash’s international expansion is underappreciated by the market and could become a major long-term source of earnings growth.  

Where the Thesis Could Be Wrong

DoorDash’s path to profitability depends on maintaining order volume growth and disciplined spending. Increased competitive pressure, regulatory shifts around gig-worker classification, or slowing consumer demand in key markets could delay margin improvements and challenge the valuation. 

Spotify: Earnings Growth Powered by Pricing and New Content Streams 

Spotify Technology (NYSE: SPOT) has entered a new phase where revenue growth and profitability are moving in tandem. The company’s shift toward marketplace tools, price increases, and higher-margin podcast and audiobook offerings is driving improved gross margins.  

Spotify’s scale advantage, over half a billion users globally, gives it tremendous data and pricing power. Its expanding suite of creator tools deepens engagement and encourages more monetization across both music and non-music audio as operating expenses grow more slowly than revenue.  

Spotify has a forward P/E ratio of around 62x. However, the company is solidly profitable, and the bottom line is expected to grow around 30% in the next 12 months. With management targeting sustained margin improvements, SPOT’s valuation looks justified and potentially conservative if execution continues. 

Where the Thesis Could Be Wrong

If licensing costs rise faster than expected or user growth slows, Spotify’s margin expansion could stall. Competitive pressure from Apple Inc. (NASDAQ: AAPL), Amazon, or emerging global platforms could also limit SPOT’s ability to push through future price increases. 

Conclusion 

Even in a market increasingly focused on valuation risks, some high-multiple growth stocks still offer compelling upside because their projected earnings growth supports further expansion. 

Shopify, DoorDash, and Spotify have each reached key profitability milestones while strengthening their long-term competitive positions. For investors willing to look beyond the usual suspects, these three names offer a more durable path to growth.