Core Viewpoint - The Supreme Court is set to hear arguments regarding the legality of President Trump's tariffs, which could significantly impact millions of businesses across the nation [1][2]. Company Insights - Shopify has reported a strong performance with nearly $90 billion in Gross Merchandise Volume (GMV), reflecting a 32% increase for the quarter [5]. - The company is focused on ensuring that its merchants are well-prepared for potential changes resulting from the Supreme Court's decision regarding tariffs [6][10]. - Shopify's AI tool, Sidekick, has been adopted by approximately 750,000 stores, facilitating better decision-making for merchants [12][14]. Industry Trends - Consumer confidence remains resilient, with shoppers continuing to make purchases, although they are becoming more selective about the brands they support [4][27]. - The upcoming holiday shopping season is expected to be significant, with merchants already preparing promotions and deals [10][11]. - The e-commerce market is evolving, with Shopify capturing about 12% of the U.S. e-commerce market, indicating its substantial role in the industry [9].

Core Insights - Shopify is evolving from a storefront builder to a comprehensive commerce operating system, positioning itself as the infrastructure layer for modern retail operations [2][14] - The transformation is expected to redefine Shopify's economics over the next decade, similar to the impact Amazon Web Services had on cloud computing [2][5] Evolution of Shopify - Shopify started as an e-commerce SaaS provider and has developed into a modular, API-driven ecosystem that caters to both startups and enterprises [3] - The launch of the Partner Solutions Center in 2025 indicates Shopify's deeper commitment to enterprise-grade infrastructure [4] Shop Pay and Payment Infrastructure - Shop Pay has transitioned from a feature for Shopify stores to a full-fledged payments and identity network, with significant partnerships enhancing its capabilities [8] - The penetration of Shop Pay within Shopify's gross merchandise volume (GMV) increased from 45% in 2020 to 62% in 2024, indicating its role as a core growth engine [10] Ecosystem Strengthening - The growth of Shopify's merchant base strengthens its ecosystem, attracting developers and partners that enhance functionality and expand reach [11] - Investments in AI infrastructure, such as the Model Context Protocol, allow third-party AI shopping agents to access Shopify data, further integrating the platform into the e-commerce landscape [12] Implications for Investors - Shopify is not only facilitating online sales but also managing operations, creating an invisible framework that connects various aspects of commerce [14] - The company is expected to see margin expansion from high-value services, earnings resilience from growing infrastructure revenue, and an expanding addressable market [15]

Core Insights - Shopify reported a 32% year-over-year revenue growth, achieving a new all-time high, reinforcing its position as a leader in e-commerce innovation [1] - Despite the revenue growth, profits fell by 68%, raising questions among investors about the sustainability of the stock [1] - The company maintains a strong balance sheet and an expanding ecosystem, indicating long-term upside potential for patient investors [1]

Core Viewpoint - Shopify's stock experienced a decline despite reporting strong revenue growth, primarily due to increased loan losses impacting earnings. However, the stock has seen significant appreciation year-to-date and over the past year [1]. Group 1: Financial Performance - Shopify's Q3 revenue increased by 32% to $2.84 billion, surpassing analyst expectations of $2.76 billion [5]. - The company's gross merchandise volume (GMV) rose by 32% to $92 billion, with international GMV increasing by 41% [6]. - Merchant solution revenue jumped 38% to $2.15 billion, while subscription revenue grew by 15% to $699 million [7]. - Adjusted EPS slightly decreased from $0.36 to $0.34 due to higher loan losses, which accounted for 5% of revenue [8]. - Monthly recurring revenue (MRR) was reported at $193 million, below the expected $195 million [9]. Group 2: Growth Drivers - Shopify attributed its robust growth to advancements in artificial intelligence (AI), with over 750,000 shops using its Sidekick AI assistant [2]. - AI-driven traffic to Shopify stores increased seven-fold since January, and orders from AI searches rose 11-fold [3]. - The company continues to attract large brands, recently adding notable names such as Estée Lauder and e.l.f. [7]. - Strong growth in Europe was highlighted, with GMV surging 49%, contributing to 21% of total revenue [6]. Group 3: Future Outlook - Shopify forecasts fourth-quarter revenue growth in the mid-to-high 20s percentage range, aligning with previous guidance [9]. - The company is well-positioned for future growth, particularly in agentic commerce and B2B sectors [11]. - Despite a high forward price-to-sales ratio of over 15 based on 2026 estimates, the company remains attractive for potential investment [12].

Core Insights - Shopify reported in-line earnings for Q3 and slightly exceeded revenue estimates, indicating strong performance in the e-commerce sector [1] Financial Performance - The company experienced an acceleration in gross merchandise volume growth during Q3, contributing positively to its financial results [1]

Group 1 - Shopify Inc. has experienced a recent decline in stock price, attributed to market trends and comparisons with other companies like Palantir [1] - The company operates a commerce platform that assists businesses in managing products, orders, payments, and customer relationships [2] - There is a belief that certain AI stocks may offer greater upside potential and carry less downside risk compared to Shopify [3]

Core Insights - Akamai Technologies (AKAM) is currently viewed as a better value opportunity compared to Shopify (SHOP) based on various financial metrics [1][7] Valuation Metrics - AKAM has a forward P/E ratio of 10.88, significantly lower than SHOP's forward P/E of 107.01 [5] - The PEG ratio for AKAM is 2.22, while SHOP's PEG ratio stands at 4.33, indicating that AKAM is more reasonably priced relative to its expected earnings growth [5] - AKAM's P/B ratio is 2.39, compared to SHOP's P/B of 16.21, further suggesting that AKAM is undervalued [6] Earnings Outlook - AKAM is currently exhibiting an improving earnings outlook, which is a positive indicator in the Zacks Rank model [3][7] - The Zacks Rank for AKAM is 2 (Buy), while SHOP holds a Zacks Rank of 3 (Hold), reflecting a more favorable earnings estimate revision trend for AKAM [3]

Core Viewpoint - Baillie Gifford's Q3 2025 investment strategy reflects a focus on long-term growth, with significant new positions in cryptocurrency and aerospace, while reducing exposure to certain high-valuation tech stocks [1][5]. New Positions and Significant Increases - Baillie Gifford added 19 new stocks in Q3 2025, with the most notable being Coinbase (COIN), acquiring over 587,000 shares, representing 0.15% of its portfolio [1]. - Another significant addition was Knife River Holding Co (KNF), with nearly 2.19 million shares purchased, valued at approximately $169 million, accounting for 0.13% of the portfolio [1]. Major Increases - The firm significantly increased its position in Rocket Lab (RKLB) by 176.15%, adding over 7.73 million shares, aligning with its investment strategy in disruptive innovation [2]. - Other important increases included The Ensign Group (ENSG), with a 96.2% increase, focusing on healthcare services [3]. Major Reductions - Baillie Gifford completely exited 18 stocks and significantly reduced positions in 188 stocks, indicating a strategic shift [3]. - A notable reduction was in Cloudflare (NET), where approximately 3.68 million shares were sold, a decrease of 14.4%, impacting the portfolio by -0.54% [3]. - Other key reductions included Spotify Technology SA (SPOT) with a 9.7% decrease (approximately 930,000 shares) and Shopify (SHOP) with a 6.1% decrease (approximately 890,000 shares) [4]. Investment Insights and Summary - The overall strategy of Baillie Gifford in Q3 2025 illustrates a "survival of the fittest" approach, focusing on future growth [5]. - The investment portfolio consists of 264 stocks, with the top five holdings being NVDA (6.43%), MELI (5.74%), SE (5.31%), AMZN (5.15%), and SPOT (4.5%) [5]. - The offensive strategy includes bold bets on frontier technologies like cryptocurrency (Coinbase) and aerospace (Rocket Lab), while the defensive strategy involves profit-taking on overvalued or stabilizing growth tech stocks [5].

Financial Performance - Shopify's Q3 gross merchandise value increased 22% year-over-year to $562 billion [4] - Shopify's subscription revenue grew, fueled by monthly recurring revenue, which soared 25% to $142 million [4] - Shopify's top line expanded 32% to $284 billion, beating Q3 estimates of $275 billion [4] - Shopify's free cash flow spiked 78% during Q3 to $57 million compared to $285 million in the compared to quarter [6] - Shopify's Q3 earnings of 34 cents per share dipped from EPS of 36 cents a year ago [5] Growth & Future Outlook - Shopify expects Q4 revenue growth in the mid to high 20% range [8] - Shopify expects to maintain full year free cash flow margins in the double digits [9] - Shopify's top line is expected to span over 20% in fiscal 2025 and fiscal year 26 with projections edging north of $13 billion [9] - Shopify's annual EPS is now slated to be up 11% in fiscal year 25 and is projected to increase another 21% in fiscal year 26 to $176 per share [9] Strategic Initiatives & Market Position - Shopify announced a partnership with open AI in September to integrate commerce directly into chat GPT [2] - Shopify's commerce operations have been enhanced with AI tools, payment installments, and expanded point of sales capabilities [3]

Group 1 - Shopify has been a favorite in the e-commerce market, but AppLovin may offer better growth potential at a lower valuation [2][3] - AppLovin shows greater revenue and operating income growth compared to Shopify, despite having a lower Price to Operating Income ratio [3] - The current discrepancy between AppLovin's valuation and performance suggests it may be a more attractive investment option than Shopify [3] Group 2 - A year-over-year analysis of key metrics may indicate whether Shopify's stock is overvalued compared to its competitors [6] - Persistent underperformance in Shopify's revenue and operating income growth could confirm that its stock is overpriced relative to peers [7] - The analysis of additional metrics is essential for a comprehensive investment assessment, which informs portfolio strategies [8]