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November 18, 2024
ChatGPT Predicts Shopify Stock Price: Will AI’s Guess Be Accurate for Year-End 2024?
Shopify stock has been on a remarkable rally this year, rocketing upward by nearly 47% year-to-date as of midday Nov. 18. But has the stock reached its relative ceiling, with little room left to grow?
A recent Finbold report indicated otherwise.
ChatGPT Predicts an Increase in Shopify Stock Price To Close Out 2024
Despite massive growth over the better part of the past decade — the brand has been “on fire since we started covering the company just over eight years ago,” according to The Motley Fool’s Iain Butler — it appears that there is still a little more room for Shopify stock to tick upward as 2024 draws to a close.
Setting ChatGPT-4o to the task of predicting the future of the Shopify stock as the year draws to an end, Finbold found the AI predicting a modest positive return, one conservatively hedged.
“The AI predicts Shopify’s stock could reach $115 to $120 by year-end, supported by robust growth drivers yet tempered by lingering challenges,” Finbold reported. The stock price rested at $106.32 as of 3 p.m. ET on Nov. 18.
When summarizing ChatGPT’s lengthy prediction, Finbold underscored the following AI-highlighted tailwinds supporting a growth case for Shopify:
- Strong holiday sales expectations focused both on “increased consumer spending” and “heightened merchant activity” throughout the season.
- Massive global expansion, with ChatGPT indicating gross market value growth of 30% year-over-year (YoY) outside of North America and 35% (or better) in certain European markets, such as France and Germany.
- Innovative merchant tools, with the AI model gesturing toward Shopify Inbox, Shopify Flow, and Shopify Tax as being responsible for improved operational efficiency and enhanced merchant capabilities before stating that these tools drive higher engagement.
As for headwinds facing Shopify’s growth, ChatGPT cited valuation concerns, a highly competitive space populated by Amazon in particular, and macroeconomic uncertainties common to most sectors as being most problematic.
Beyond ChatGPT: What Are Human Analysts Saying About Shopify Stock?
ChatGPT may not be far off the mark in its predictions, at least according to certain experts.
According to a Nov. 15 analysis from Zacks Equity Research, Shopify remains a decent bet for investors.
“Our proprietary system currently recommends Shopify as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank,” Zacks stated. “While the overall earnings estimate revisions have made Shopify a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors … This combination positions Shopify well for outperformance, so growth investors may want to bet on it.”
Zacks pointed to strong projected sales growth (with expected earnings per share growth of 53.4%, much higher than the industry average of 35.6%), strong sales growth (projected growth of 23.7%, versus a flat industry average of 0%), an impressive asset utilization ratio, and “promising” earnings estimate revisions as backing its support of a Shopify stock purchase.
In a conversation with fellow Motley Fool analyst Nick Sciple held on Nov. 15, Iain Butler made his case for Shopify plain.
“Shopify was not profitable. But this most recent quarter, they reported 19% free cash flow margin. And just another fun little stat: Back then, they had 1,000 employees. Today they are over 8,000 employees, and I think they’ve gone from focusing on small merchants to all merchants, and they’ve even gone beyond online. They have an offline business. Now they are going business-to-business, not just business-to-customer, and they’ve really expanded an international business, too. So the company has just exploded,” Butler said.
“It continues to sort of grow new tentacles, expanding on what it’s got in its core and growing beyond that. So it’s a fun company to read about every quarter, as opposed to a lot of the companies that we come across where there’s a lot of ‘yeah, this is good, but …’ Everything just continues to roll very nicely for Shopify,” Butler added.
On the other hand, Barchart financial writer Amit Singh suggested that short-term investors wait for a better time to buy in, as — despite solid fundamentals and growth potential — “the recent stock rally [had] priced in much of the near-term optimism.”
Discussion Questions
Is ChatGPT an accurate tool for predicting stock prices in the short or long term?
Will Shopify continue to see rampant growth, or has it reached a soft ceiling in terms of opportunities?
Will human analysts always have an edge over AI investment analysis, or will refinements to AI models such as ChatGPT make the role of human experts redundant?
Poll
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David Spear
President, Retail, OrderlyMeds
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
John Lietsch
CEO/Founder, Align Business Consulting
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The only honest answer to this question is: we don’t know. We are not at the end of 2024 yet, so it is impossible to say whether AI has been accurate or not. The underlying analysis from AI seems reasonable enough. What I wonder about is its ability to forecast downside risks as much as detect current trends which, while interesting, are not all that revelatory.
Given “past performance is not indicative of future results” and that ChatGPT’s predictive abilities are based on readily available information including sentiment (data) then one would venture to guess that if it’s going to have any chance at being right about stock prices (relative movements), its best chance is in the very near term (short term).
However, I think it’s hard to bet that ChatGPT will beat the likes of a Warren Buffett over a long period of time. But to be fair to ChatGPT, there aren’t many humans that can do that either (maybe it’s because those humans think like ChatGPT).
Everyone can get lucky in Vegas in the short term!
News headlines can often be used by ChatGPT to determine whether a stock price will rise or fall. Chatbot search wars are on, and investors are scrambling to put their money into the future of artificial intelligence. Investing firms will start using this technology if they haven’t already, and stock prices will reflect all the most recent information better because of it.
There certainly is a place for AI in stock prediction but not necessarily as a standalone solution. It will do an amazing job with a select set of use cases such as research, summation, eval & analysis. And it will perform these functions in a mere 3-5 seconds with an enormous amount of data. The results are impressive and often eerily accurate, but bias can be found, and this is where individuals must review and respond with their years of industry experience. For instance, how does AI provide prediction of how a senior management team is going to respond to a crisis like the supply chain snarls during COVID or a regional war that impacts major offshore IT centers in certain parts of the world? Like all tech solutions, AI has its place in the financial markets and will provide incredible value in the process. However, to rely on it 100% for stock price performance is a bit of irrational exuberance.
I used to say, “It must be true. I read it on the Internet.” Now I say the same thing about ChatGPT. The technology serves a powerful function, giving us great information – often hard to get – at our fingertips. However, it is sometimes wrong, and there is even a disclaimer at the bottom. ChatGPT and similar technologies can serve to augment human intelligence, not take it over completely – at least not at this time. It is combing the Internet for relevant information, and even when there’s a credible source, it could be wrong. So, if you’re going to use ChatGPT to predict a stock price for Shopify (or any other company), be aware of the disclaimer.
AI tools like ChatGPT work off of their training which in the past was time-limited. Now, with real-time Internet built in for several of the models, and with tools like Perplexity serving as answer engines, we will see more of this going forward. Over the long haul, I wouldn’t bet against it as these models will continue to get more accurate.
Shopify will probably see continued growth, but no one knows for certain since we cannot predict the future. No AI or human has been ever to predict the future with any kind of regular certainty, otherwise they would be a trillionaire many times over. Predicting the changes in the market from moment to moment is a finicky, unpredictable, guess…at best. You can identify tendancies by category, but anything more specific than this is nothing more than gambling.
Just as every financial model learned in school assumes perfectly efficient markets with rational investors, we all know that not to be the case. Until AI can discern the most basic of human emotions in investing – namely greed and fear – it will be directional in its accuracy at best.