Shopify (SHOP): Evolution from E-Commerce Platform to AI Operating System
Rowan Street Capital, an investment management company, released its Q1 2026 investor letter. A copy of the letter can be downloaded here. The Fund’s performance remained stable in the second quarter, with the portfolio declining about 1$ from the first quarter, resulting in a net return of -21% for the second half of 2026. Despite the stock prices of several holdings facing pressure in 2026, the underlying businesses have performed effectively, marking a trend where stock prices may not align with business performance. This divergence is typical in long-term investing, as business performance ultimately drives investment returns. Rowan Street emphasizes patience, conviction, and long‑term business performance over short‑term market enthusiasm. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Rowan Street Capital highlighted Shopify Inc. (NASDAQ:SHOP). Shopify Inc. (NASDAQ:SHOP) is a Canada-based e-commerce technology company that provides a cloud-based platform for individuals and companies to create and manage their operations. On July 31, 2026, Shopify Inc. (NASDAQ:SHOP) closed at $117.15 per share, reflecting a market capitalization of $152.02 billion. Shopify Inc. (NASDAQ:SHOP) posted a one-month return of -2.49%, while its shares lost 6.44% over the past 52 weeks.
Rowan Street Capital stated the following regarding Shopify Inc. (NASDAQ:SHOP) in its Q2 2026 investor update:
“Shopify Inc. (NASDAQ:SHOP) reports its Q2 results on August 5, so this update reflects the company’s Q1 performance. Shopify delivered another outstanding quarter. Revenue grew 34% year over year to $3.2 billion—its strongest quarterly growth in four years—while Gross Merchandise Volume (GMV) increased 35% to $101 billion, marking the second consecutive quarter above the $100 billion threshold.
Growth remained broad-based across the platform. B2B revenue increased 80%, Shop Pay revenue grew 59%, free cash flow margin remained a healthy 15%, and core operating income more than doubled to $382 million.
The market remains focused on the potential impact of AI-powered shopping agents. As consumers increasingly use conversational AI to search for products and make purchases, some investors question whether traditional e-commerce platforms will remain as important in facilitating online commerce…” (Click here to read the full text)
Shopify Inc. (NASDAQ:SHOP) is not on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 88 hedge fund portfolios held Shopify Inc. (NASDAQ:SHOP) at the end of the fourth quarter, compared to 101 in the previous quarter. In Q1 2026, Shopify Inc. (NASDAQ:SHOP) generated revenue of $3.2 billion, reflection 34% year-over-year increase. While we acknowledge the potential of Shopify Inc. (NASDAQ:SHOP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.
