Wall Street has opined that personal consumer artificial-intelligence agents, like Meta Platforms' Muse, could signal the destruction of Shopify's business model. It's becoming increasingly clear that may not be the case.
Shopify CEO Tobi Lutke said the company has partnered with Muse to "enable agentic checkout with Shop Pay on all Shopify stores."
The partnership, announced Monday, would allow consumers to discover products from Shopify merchants and complete purchases through Shop Pay within the Muse experience.
Lutke added that consumers will have an "easy and delightful way to shop and check out with Muse."
Deutsche Bank analyst Bhavin Shah said the partnership was strategically important because it provides "another proof point that leading AI platforms are integrating with Shopify's commerce infrastructure."
"We believe the partnership helps refute the recent bear thesis that AI agents and personal shoppers could disintermediate Shopify and its large payments business," Shah added. "In fact, the partnership suggests the opposite and reinforces Shopify's core strengths."
Deutsche Bank has a Buy rating on Shopify with a $185 price target.
Shopify stock rose 7.9% to $148.85 on Tuesday after gaining 7.3% on Monday as investors continued to push shares higher due to Muse. Meta stock, meanwhile, advanced 0.5% to $744.71 after rising more than 11% on Monday.
Concerns remain, however, as Shah acknowledged questions exist around the monetization of personal AI assistants and whether they will take a "cut of the transaction" or impacts Shopify's current transaction fees.
"This is another concern from investors and we look forward to learning more about this over the coming months," Shah wrote.
Wall Street's bearish AI thesis on Shopify is that consumer AI agents will arrive initially, weakening the company's business, and then Big Tech will introduce small business AI tools that build the e-commerce storefronts, create and run advertisements, handle payments, and catalog customer relationship management.
Even still, the Muse integration was a positive for Shopify, especially with both Wall Street and consumers heaping praise on Muse.
Jefferies raised its price target on Meta Platforms to $875 from $710 with the firm noting that prior to Muse investors had completely dismissed the idea that Meta would be able to release a personalized consumer AI agent and that Alphabet-owned Google seemed the preferred way to play the space. Meta, however, has turned out a "killer product" with Muse that "flips the narrative," according to Jefferies.
J.P. Morgan, meanwhile, claimed on Tuesday that Muse has the potential to become the most widely used consumer AI application since OpenAI's ChatGPT.
Shopify hasn't only been busy strengthening its partnership with Meta. OpenAI last week selected Shopify as its first e-commerce partner whose merchants are able to manage ChatGPT advertising campaigns directly through Shopify.
"This reinforces our view that Shopify is benefiting from its role in the infrastructure layer underpinning AI-driven commerce rather than being at risk of displacement," TD Cowen analyst John Shao wrote.
Even with the business concerns aside, Shopify has finished up a tidy bit of business with partnerships with the the AI model that started it all and, possibly, the next big one to arrive.
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