Shares of Shopify Inc. (TSX:SHOP) fell sharply on Friday, October 30, as a broad sell-off in technology stocks hit the Canadian E-commerce giant.

The trigger was in the U.S., where weak results from Intel and Amazon revived worries about heavy spending on artificial intelligence. Shopify did not report any news of its own on Friday; its third-quarter results are due on Tuesday, November 3.

What happened

Shopify was one of the biggest drags on the S&P/TSX Composite index on Friday. Shopify was among the session's notable decliners, an e-commerce stock caught in the tech slide.

Its Nasdaq-listed shares were quoted at about US$157.49.

The company did not issue a news release on Friday, and no analyst rating change tied to the drop was reported. The decline tracked the wider sector rather than anything specific to Shopify.

South of the border, Intel shares lost more than a quarter of their value after the chipmaker's results, and the Philadelphia Semiconductor Index sank sharply. The Nasdaq also fell hard. Amazon's results also weighed on sentiment, with investors focused on how much big tech is spending to build out AI.

Why it matters

Shopify is Canada's largest technology company and one of the heaviest weights in the TSX tech sector. When U.S. tech stocks sell off, it often moves with them.

The link to Amazon is direct. Both companies live off online shopping, so any sign of strain in e-commerce or in big tech's AI plans tends to ripple through to Shopify.

Shopify has also leaned hard into AI, building tools to help merchants write product listings, run stores and handle customer questions. That has been a selling point. But on days when investors question the payoff from AI spending, companies tied to the theme can fall together.

Timing added to the pressure. With the company's own results just days away, some investors may have chosen to lock in profits or step aside rather than hold through the report.

Shares of high-growth technology companies also tend to be more sensitive to interest rates. With the Bank of Canada now raising rates and markets expecting more hikes, the case for paying a premium for future growth gets harder to make.

The bigger picture

Friday was a rough day across the board. The S&P/TSX Composite fell about 629 points to 35,620.03, its steepest daily drop since June and its lowest close since October 14.

Technology and materials led the losses. Gold fell to a one-year low, dragging down miners. Banks slipped on worries about further rate hikes after the Bank of Canada raised its Key Rate on Wednesday, October 28, for the first time in about three years.

Energy was a rare bright spot, as Crude Oil rose above US$100 a barrel after a tanker attack in the Strait of Hormuz.

What to watch next

The key date is Tuesday, November 3. Shopify plans to release its third-quarter results before markets open, followed by a conference call at 8:30 a.m. Eastern.

Investors will look at gross merchandise volume, which measures the total value of sales on the platform, along with Revenue growth, free Cash Flow and the company's outlook for the holiday season.

Commentary on AI will matter too. After Friday's sell-off, the market will want evidence that Shopify's AI investments are paying off for merchants and for its own margins.

Until then, Shopify's shares are likely to keep trading with the mood in U.S. tech.