Shopify (SHOP) stock jumped 17% on August 5 after a second-quarter earnings beat crushed a monthslong narrative about artificial intelligence eating its business.

Revenue climbed 34% year over year to $3.58 billion, beating estimates by $140 million. Shopify also raised its guidance for the current quarter.

Wall Street Got the AI Threat Backwards

CNBC’s Jim Cramer went after analysts who spent the summer predicting Shopify’s downfall. They argued that so-called vibe coding would let small merchants skip Shopify entirely. Vibe coding refers to informal AI tools that let non-engineers build software with plain-language prompts.

Cramer called that logic backwards. Shopify’s customers are mostly small and medium-sized businesses. They rarely have the resources to build or maintain commerce software, no matter how advanced AI tools become.

“I’m so angry at people who basically said, you know what, Shopify’s going to be eaten by vibe code, as if small, medium-sized businesses could somehow obviate you when you do so much more than just fulfillment.”
— Jim Cramer, Mad Money

However, not everyone shares that confidence. Rothschild & Co Redburn downgraded Shopify to neutral in July. The firm warned that Meta’s push into AI tools for small businesses could erode Shopify’s edge.

Finkelstein Says AI Is Creating Customers, Not Cutting Them

Shopify president Harley Finkelstein pushed back on the AI-threat narrative directly. He told Cramer that AI is fueling a boom in new business formation. More entrepreneurs launching stores means more potential Shopify merchants, not fewer.

“Shopify has been famously underestimated well before the IPO, and I don’t mind that. I like proving them wrong.”
— Harley Finkelstein, President, Shopify

Cramer’s willingness to reverse course publicly isn’t new. He made headlines this week for saying he would sell his Bitcoin holdings over IBM’s quantum computing warning.

Meanwhile, some investors are growing cautious on AI valuations broadly. Michael Burry recently flagged a possible 1987-type crash risk, even as major indexes hit record highs.

For now, Shopify’s numbers back the bulls, not the bears. If the AI-driven business boom that Finkelstein described fades, Wall Street’s about-face on Shopify may not stick.

Source: BeInCrypto