As fellow enterprise software stock Palantir Technologies takes aim at an all-time high, Shopify continues to build a fresh buy point while landing a spot on the IBD Leaderboard watchlist. Looking to join artificial intelligence powerhouses like Meta Platforms and Nvidia as a full-fledged IBD Leaderboard member, Shopify stock has set up an early entry amid clear signs of demand.
Chart Reveals Positive Twist For Shopify Stock
Shares of Shopify have been on a rocky rise since the stock found a bottom two years ago. That followed a sharp decline that began in November 2021.
The rebound over the last two years has come as Shopify continued its track record of solid and steady sales growth and began to post a string of quarters showing gains of triple digits or better in earnings.
After carving out a deep cup base that began forming in February, Shopify stock has added a handle. That provides an earlier entry at 84.37.
Technically, the current formation is a fourth-stage base. Such later-stage bases carry more risk than first- or second-stage patterns. But in the case of Shopify, the deep 47% decline in the cup shook out a large swath of sellers. That helps clear the way for Shopify stock to launch a sustained new climb.
Also note how trading has tightened up in recent weeks as Shopify approaches a breakout. Along with a sharply rising 50-day moving average and support at the 21-day line, that points to rising technical strength. Plus, a B+ Accumulation/Distribution Rating and 1.6 up/down volume ratio point to strong demand for the stock.
On Monday, Shopify dipped but held support at its 21-day line and came off the day's lows.
Meanwhile, Palantir stock has flown well beyond buy range and Meta Platforms remains slightly extended. With its relative strength line on the rise, Nvidia stock shot out to an all-time high Monday, rising over 4% in the process.
Shopify Magic Adds To Growth With AI Features
Operating in more than 175 countries, Shopify helps companies of any size start, scale, market, and run a retail business. In addition to small and midsize firms, Shopify also works with large enterprises such as Netflix and Mattel.
In each of the last eight quarters, Shopify has delivered double-digit revenue gains ranging from 21% to 31%. On Aug. 7, the company reported sales of slightly more than $2 billion for the second quarter.
Shopify delivered an 86% year-over-year gain in earnings to 26 cents a share in the second quarter. When the company reports third-quarter results on Oct. 31, analysts forecast 14% earnings growth to 27 cents a share.
For the full year, Wall Street expects Shopify to deliver a 54% earnings increase to $1.12 a share, followed by a 23% rise to $1.38 a share in 2025.
Shopify stock sports a strong 97 Composite Rating, not far behind the highest-possible 99 rating for industry peer Palantir. Shopify actually tops Meta's 96 Composite Rating, while Nvidia shares the 'perfect' 99 rating with Palantir.
To help continue driving that growth, Shopify has integrated Shopify Magic across its commerce platform. A suite of free features enabled with artificial intelligence, Shopify Magic aims to help users tap the power of AI to streamline operations in sales, marketing, customer support, and back office operations.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
