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]

Group 1 - JPMorgan raised the price target on Shopify (SHOP) to $180 from $179 while maintaining an Overweight rating on the shares [1] - The increase in price target is attributed to positive estimate revisions following the earnings report [1] - Shopify's volume growth accelerated sequentially in Q3, but there was a spike in transaction losses affecting the Q4 free cash flow margin outlook [1] Group 2 - JPMorgan noted that there has not been a significant change in intra-quarter spending trends for Shopify [1] - The increase in transaction losses is described as "treatable" by the analyst [1]

Core Insights - Shopify reported strong GMV growth of $9.2 billion, a 32% year-over-year increase, exceeding expectations despite a high base from the previous quarter [6][18] - The company is experiencing a trend of increasing revenue but declining profit margins, indicating a "growth without profit" scenario [13][14] GMV Growth - The GMV growth continues to accelerate, reaching $9.2 billion with a year-over-year growth of 32%, outperforming market expectations [6][18] - Shopify Payments penetration in GMV increased by 0.5 percentage points to 65.4%, driving GPV growth to 40%, which is higher than GMV growth [7][19] Subscription Business - Monthly Recurring Revenue (MRR) was $193 million, a 10.3% year-over-year increase, but still below market expectations due to the impact of free trial promotions [8][23] - Subscription service revenue grew by 14.6% year-over-year, but the growth rate is slowing down [8][25] Merchant Services - Merchant services revenue reached $2.15 billion, a nearly 39% year-over-year increase, benefiting from strong GMV growth [8][25] - The service monetization rate increased by approximately 10 basis points to 2.33%, indicating a stable upward trend [7][25] Profit Margins - Gross margins are under pressure, with subscription margins declining by 0.6 percentage points and merchant service margins declining by 1.5 percentage points [10][30] - Overall gross profit margin decreased by about 2.8 percentage points, falling below market expectations [10][29] Expenses and Profitability - Total expenses grew by approximately 25.5% year-over-year, maintaining a high growth rate, which is outpacing gross profit growth [10][34] - Operating profit margin decreased by about 1 percentage point, and free cash flow was approximately $510 million, a 20.4% year-over-year increase, but below revenue and gross profit growth rates [10][37]

Core Insights - The next decade of growth will be driven by digital innovation, e-commerce expansion, and semiconductor dominance, with only a few companies positioned for long-term success [1] Group 1: Company Overviews - Shopify is a leading global e-commerce platform used by millions of merchants in around 175 countries, offering an integrated commerce stack that includes payment processing and logistics [3][5] - MercadoLibre dominates e-commerce and fintech in Latin America, with significant market shares in Brazil (27%), Argentina (68%), and Mexico (14%) [6] - TSMC is a key player in the semiconductor industry, providing advanced chips essential for AI model builders, with a strong revenue outlook for Q4 2025 [7][12] Group 2: Financial Performance - Shopify's financial indicators for Q2 2025 show strong growth, with revenue and gross merchandise volume increasing by 31% year-on-year [8] - MercadoLibre reported net revenues of US$33.1 billion for Q3 2025, a 40.8% year-on-year increase, with a gross margin of 59.5% [8] - TSMC's revenue for Q3 2025 is projected to be between US$32.2 billion and US$33.4 billion, with a gross profit margin expected between 59% and 61% [7][11] Group 3: Market Trends and Innovations - The trend of agentic commerce, where AI agents facilitate transactions, is emerging, with Shopify partnering with OpenAI's ChatGPT to leverage this trend [4] - TSMC is advancing its manufacturing capabilities with the introduction of 2nm process technology, enhancing supply chain resilience for clients [11] Group 4: Investment Potential - Investments in Shopify, MercadoLibre, and TSMC since 2016 have yielded compounded total returns ranging from approximately 1,000% to 4,700%, indicating strong long-term growth potential [14] - These companies are positioned in secular growth markets, making them attractive for long-term investment strategies [13][15]

Core Viewpoint - Wedbush raised the target price for Shopify from $160 to $185 while maintaining an "Outperform" rating [1] Group 1 - The target price adjustment reflects a positive outlook on Shopify's performance in the market [1] - The "Outperform" rating indicates confidence in Shopify's ability to exceed market expectations [1]

Group 1 - The discussion centers around the importance of trusting the market and recognizing buying opportunities during downturns, emphasizing that discipline in growth investing is crucial for long-term success [4][19][28] - The performance of major indices such as the Dow, S&P, and NASDAQ indicates a rebound after a previous disappointing session, highlighting the volatility and potential for recovery in the market [3] - The interview with Larry Culp, CEO of GE Aerospace, showcases his leadership in revitalizing General Electric, indicating the significance of strong executive management in navigating corporate challenges [2][29] Group 2 - The analysis of specific stocks like Shopify and McDonald's illustrates the need to look beyond market sentiment and focus on company fundamentals, suggesting that perceived downturns may present buying opportunities [12][15][17] - Concerns about the concentration of economic growth in AI and semiconductor stocks raise questions about market stability and valuation, with a focus on the performance metrics of companies like Meta, Google, and Nvidia [21][22][24] - The commentary on M&A activity in the healthcare sector highlights the strategic moves of pharmaceutical companies and the challenges faced by biotech firms, indicating a dynamic landscape for investment opportunities [26][27]

Core Insights - Shopify's stock has increased over 400% in the last three years, outperforming broader indexes and Amazon's 175% growth [1] - The company announced a partnership with OpenAI to integrate commerce into ChatGPT, which has contributed to its momentum [2] Financial Performance - Shopify's Q3 Gross Merchandise Volume (GMV) rose 22% year over year to $56.2 billion, with subscription revenue increasing 25% to $142 million [4] - Total revenue for Q3 expanded 32% to $2.84 billion, surpassing estimates of $2.75 billion [5] - Q3 earnings per share (EPS) were $0.34, slightly down from $0.36 a year ago but aligned with market expectations [5] Efficiency Metrics - Free cash flow (FCF) surged 78% in Q3 to $507 million, marking the ninth consecutive quarter of double-digit FCF margins at 18% [6] - Shopify's FCF conversion rate exceeds 80%, indicating strong efficiency in turning operating profits into free cash flow [7] - Return on Investment Capital (ROIC) typically ranges from 14% to 19%, suggesting robust capital investment returns [7] Future Outlook - Shopify anticipates Q4 revenue growth in the mid to high 20% range, maintaining full-year FCF margins in double digits [9] - Projections indicate over 20% top-line growth for fiscal years 2025 and 2026, with annual EPS expected to rise 11% in FY25 and 21% in FY26 to $1.76 [10] Valuation and Market Position - Shopify's stock trades at a forward earnings premium of 110X, with efficiency metrics suggesting potential for growth into this valuation [12] - The company holds a Zacks Rank 1 (Strong Buy), supported by a positive EPS revision trend [13]