Etsy is leveraging artificial intelligence to reignite growth across its platform, a decision that has caused significant volatility in its stock price.
- Etsy Stock price surges 12% after AI deal.
- Analysts say enthusiasm overdone; stock plummets 11% on Sept. 30.
- Etsy promises innovations for product discoverability.
On Monday, OpenAI announced a partnership with Etsy, a business-to-customer global online marketplace. The deal enables U.S. ChatGPT users to shop directly with Etsy (ETSY) sellers in the US, all within the chat interface.
“U.S. ChatGPT Plus, Pro, and Free users can now buy directly from the U.S. Etsy sellers right in chat, with over a million Shopify merchants, like Glossier, SKIMS, Spanx and Vuori, coming soon,” OpenAI said in a blog post.
The integration will connect millions of ChatGPT users and prospective buyers to the 5.4 million active Etsy sellers, embedding the marketplace into what OpenAI calls the future of “agentic commerce.”
The announcement briefly gave Etsy’s stock a significant boost, causing it to surge 12% to a 52-week high on Monday. Yet, as analyst reports started coming in, Etsy lost its luster, causing a sharp sell-off.
Analyst sentiment and revenue reports
Etsy’s stock price fell 10.7% in Tuesday trading after Morgan Stanley warned that enthusiasm over the move “seems overdone.”
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Stanley questioned whether AI-driven commerce would benefit or prove disruptive to Etsy in the long run. It reiterated an Equal Weight rating on the firm with a price target of $54.
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Meanwhile, BTIG was more bullish, raising its price target on Etsy to $81 from $72 and maintaining a Buy rating. It argues that investors may be underestimating the scale of ChatGPT, the foreseeable market unlock, and agentic innovation, as noted at TheFly.
This AI announcement comes after Etsy’s Q2 2025 results suggested promise and pressure.
Gross Merchandise Sales (GMS) fell 4.8% year-over-year to $2.8 billion. Net income slid 46% to $28.8 million, primarily due to foreign exchange losses; however, revenue rose 3.8% to $672.7 million, mainly driven by Etsy Ads and payments.
Related: Etsy CEO says site can help Americans with key problem
One bright spot for Etsy is Depop, a fashion resale marketplace that it acquired in 2021 for $1.6 billion, benefiting from the growing interest in vintage and thrift shopping.
Depop’s GMS jumped to $250 million, up 35% year over year, and U.S. growth accelerated by 54%.
Etsy executives say that the OpenAI integration is part of the larger strategic push to make shopping more personalised, visual and discovery-driven.
“This integration builds on work we’ve done throughout 2025 to harness the power of LLMs in ways that amplify human connection and aim to drive growth for our sellers,” said Rafe Colburn, Etsy’s Chief Product and Technology Officer.
Etsy has not revealed the identity of its tech partner.
Rivals racing with AI
Etsy is not alone in its pursuit of benefiting from AI-powered commerce. Amazon, a pioneer in utilising AI for product recommendations, is expanding its use of AI in search and advertising.
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eBay is utilising AI to assist sellers in creating faster listings and enhancing product descriptions.
The resale shopping platform Poshmark is also testing AI to help buyers discover curated resale items.
Amidst such innovation and competition, Etsy is relying on ChatGPT’s 700 million active users to drive its growth. It noted a 4.6% decline in active buyers in its Q2 reports.
The company is also preparing to transfer the listing of its common stock from the Nasdaq to the New York Stock Exchange (NYSE) beginning October 13.
Related: Major office supply retailer sold after it closed 1,000 stores
