Shopify Inc's stock soared 5% in pre-market trading on Friday after Loop Capital upgraded the e-commerce company to a "Buy" rating and raised its price target to $140, citing Shopify's leveraging of artificial intelligence (AI) technologies as a key driver for future growth.
According to Loop Capital analyst Anthony Chukumba, investors are underestimating Shopify's effective utilization of AI to better serve its merchants through AI-powered offerings like personalized response recommendations and instantly generated emails. The company is also applying AI internally across areas such as customer support, sales, and human resources.
"Thus, we believe Shopify will be able to grow its revenue at a much faster rate than its operating expenses for the foreseeable future, which will result in operating and free cash flow margin expansion and a higher valuation," Chukumba stated in his report upgrading Shopify.
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