Will AI agents disrupt e-commerce platforms? Morgan Stanley backs Shopify (SHOP.US): transaction model builds a moat, maintains "Overweight" rating with a $192 price target.

Morgan Stanley said in its latest research report that the rapid adoption of consumer AI agents such as Meta's (META.US) Muse and Instinct has once again sparked market discussion about AI reshaping the e-commerce landscape, but the bank's view on Shopify (SHOP.US) remains unchanged. Morgan Stanley believes that Shopify's core advantage lies in the fact that it primarily monetizes from the transaction itself rather than from traffic exposure. Therefore, regardless of whether consumers ultimately discover products through AI agents, social platforms, or merchants' own online stores, as long as the transaction is still completed within the Shopify ecosystem, the impact on its business model is relatively limited. Morgan Stanley believes that as consumers' channels for discovering products become increasingly fragmented, Shopify's strategic value as the underlying platform connecting merchants, product catalogs, checkout, orders, inventory, and returns may actually increase. The bank maintains its "Overweight" rating on Shopify with a price target of $192. AI Agents Go Viral and Reignite E-commerce "Disruption" Debate: Shopify May Actually Benefit The rapid development of Meta Muse and Instinct has brought the previously more theoretical concept of "AI agent e-commerce" into the real consumer market. Morgan Stanley noted that these two products are the first AI agents to truly achieve large-scale consumer distribution, marking an important turning point in the discussion of agentic commerce. At the same time, a series of developmentsincluding Amazon.com, Inc. blocking Muse from completing transactions directly on its platform, and the announcement that Shop Pay and Muse will connect to all Shopify storeshave also sparked market discussion about how future AI agents will actually connect merchants, payment systems, and consumers. However, Morgan Stanley believes that Shopify may be one of the companies best positioned to manage, support, and monetize this trend. First, Shopify controls a massive library of purchasable goods. Its Catalog has already indexed more than 1 billion products and provides real-time pricing and inventory information. Second, the company has advanced relatively quickly in AI e-commerce infrastructure in recent years, including co-developing UCP with Alphabet Inc. Class C (GOOG.US, GOOGL.US), and enabling Agentic Storefronts by default before most consumer AI agents had even launched. More importantly, Shopify does not control just a single link in the e-commerce chain, but possesses an entire system covering product catalogs, checkout, orders, inventory, and returns. This means that in the AI agent era, it is not only a participant but also has the opportunity to become an infrastructure provider supporting agent transactions. Not Relying on "Selling Traffic" Becomes an Advantage: Where AI Brings Orders From Does Not Matter Morgan Stanley especially emphasized that Shopify's lack of a large-scale retail media business may actually become an advantage in the AI agent era. Unlike platforms that rely on advertising exposure and search ranking to monetize, Shopify primarily makes money from transactions. Therefore, for Shopify, whether an order comes from Muse, other frontier AI models, or the merchant's own online store does not fundamentally change its revenue model. In other words, AI agents may change where consumers discover products, but as long as the final order is still completed through a Shopify merchant, Shopify can still earn revenue from the transaction. Morgan Stanley further pointed out that this "neutrality" also helps Shopify become a platform that AI agents are willing to connect to. For AI agents, the real constraint may not be whether they have the ability to find products, but whether they can access enough merchants willing to accept agent transactions. Shopify can provide AI agents with millions of merchants and their real-time inventory and pricing information through a single integration. At the same time, from the merchant's perspective, the future will require simultaneously managing an increasing number of sales channels, including Muse, Instinct, Gemini, Copilot, social media, online marketplaces, physical POS, and their own online stores. The more fragmented the channels become, the more valuable it is to be able to uniformly manage product catalogs, orders, and settlement through one platform. AI Agents Using Other Wallets Does Not Mean Shopify Loses Payment Revenue Payments is also one of the most intensely debated issues in the market recently. Morgan Stanley believes there is an important misconception in the market: if a consumer shops through Muse and completes payment using a third-party wallet such as Stripe's Link, it does not mean that Shopify will be excluded from the transaction. The reason is that digital wallets and payment processors are choices at two different levels. Consumers, or AI agents acting on their behalf, decide which wallet to use; but merchants have already decided which payment processor to use when they join Shopify. The entry of AI agents into the checkout process does not automatically change the merchant's underlying payment processing system. For example, if Muse generates a one-time virtual card through Link and submits it to a Shopify merchant's ordinary checkout page, and that merchant uses Shopify Payments, then Shopify can still earn full payment processing revenue. As of the second quarter of 2026, Shopify Payments had already covered about 68% of GMV. Even if consumers use third-party wallets, as long as the underlying payment processing is still completed by Shopify Payments, its payment processing economic benefits remain basically unchanged. Morgan Stanley therefore believes that Shopify's payment processing revenue is safer than the risk reflected in recent stock price volatility. However, what may truly face competition is the consumer "identity layer." If consumers use third-party wallets such as Link or a future Meta Pay, then the relevant wallet providers may control consumer data and the customer relationship rather than Shop Pay. Therefore, the wallet entry point within AI agents may still become a key battleground for major platforms in the future. Actual Revenue Contribution From AI Remains Limited; Short-Term Impact Should Not Be Overestimated Although bullish on Shopify's strategic position in the AI agent era, Morgan Stanley has not significantly raised its short-term performance expectations for the company. The report noted that in the first 12 days after Muse launched, cumulative downloads in the United States and Canada were about 2.8 million, and download users are not the same as actual buyers; Instinct is still invitation-only, with a user base of about 100,000. By comparison, in 2024, about 875 million unique consumers purchased goods from Shopify merchants, while the market expects Shopify's 2026 GMV to reach about $500 billion. There is still a huge scale gap between the two. Therefore, Morgan Stanley believes it is still too early to directly translate the popularity of AI agents into Shopify's near-term revenue or GMV forecasts. The bank also wants to see more evidence that consumers are willing to use AI agents to autonomously purchase general discretionary consumer goods, not just in specific scenarios such as "monitoring when a certain product is restocked and automatically buying it." However, data currently disclosed by Shopify has already released some positive signals. As of the second quarter, new buyer orders from AI channels were being generated at nearly twice the rate of other channels; about three-quarters of AI channel orders came from product categories outside Shopify's top 100, meaning AI agents may help consumers discover "long-tail products" that traditional keyword search struggles to surface. At the same time, both traffic and orders from AI channels grew by about two times, meaning they reached about three times their previous level, consistent with Shopify management's judgment that AI traffic is bringing incremental demand beyond traditional search. Therefore, Morgan Stanley believes that at this stage, the impact of AI agents on Shopify is at least neutral, and as adoption scales up, it may bring incremental growth to the company in the future. Four Major Long-Term Questions Remain for AI Agents However, Morgan Stanley believes that after AI agents truly become a mainstream shopping channel, there are still some long-term issues to observe. The first is whether AI agent platforms will charge Shopify a "traffic fee" in the future. Currently, the commercial terms between Shopify and Muse, Copilot, Alphabet Inc. Class C, and other AI platforms have not been made public, and Shopify currently obtains distribution from these channels essentially for free. If consumer traffic gradually concentrates on a few large AI agent platforms in the future, the party controlling consumer demand may gain stronger bargaining power and then charge product supply platforms like Shopify. Second, AI agents may reduce merchants' customer acquisition costs, but they may also weaken the direct relationship between merchants and consumers. If consumers complete all shopping through AI, merchants may be unable to obtain consumer email addresses and may find it harder to build repeat purchase relationships, which could affect customer lifetime value. Third, whether AI agents will help long-tail products gain more exposure or ultimately concentrate traffic on a few top products like traditional search engines remains unanswered. The fourth is brand premium. AI agents can instantly compare prices, features, and reviews across different products, and have almost no "brand loyalty" in the traditional sense. For the many apparel, beauty, and lifestyle brands on Shopify's platform, this could be either a risk or, to some extent, a protection due to brand awareness and social attributes. Morgan Stanley Maintains Shopify "Overweight" Rating With $192 Price Target On valuation, Morgan Stanley acknowledges that Shopify is not cheap at present, trading at about 50 times expected 2027 free cash flow. But after considering growth factors, the bank believes Shopify's valuation is basically comparable to large software companies, while lower than some infrastructure and cybersecurity companies with similar free cash flow growth prospects. Morgan Stanley estimates that under a base case, Shopify's revenue will grow to $87 billion by 2035 at a 23% compound annual growth rate; as operating efficiency improves, operating margin is expected to reach 30%, generating about $23 billion in free cash flow. Based on a 30 times 2035 enterprise value/free cash flow multiple and a 10.3% weighted average cost of capital, the bank gives Shopify a $192 price target.