Analyst Maintains Hold on Spotify as AI-Linked Costs Rise and Strategic Risks Prompt Price Target Cut to $400

Pivotal Research analyst Jeffrey Wlodarczak reiterated a Hold rating on Spotify today and set a price target of $400.00.

Jeffrey Wlodarczak has given his Hold rating due to a combination of factors, starting with the view that Spotify’s recent quarter was broadly solid and roughly matched his expectations, but its near-term guidance implies meaningfully higher spending tied to AI, marketing, and royalty obligations. Those higher projected costs, along with a weaker expense outlook, led him to reduce his year-end 2026 price target from $420 to $400, leaving the shares trading close to what he sees as fair value.

At the same time, he sees growing strategic risk from AI, which could erode Spotify’s key advantages in premium streaming and recommendations, encourage more competition for listening time, and potentially compress the long-term opportunity in paid music. While he acknowledges Spotify is actively deploying AI tools like its AI DJ and other personalization features, he doubts these initiatives will fully offset the structural pressures, including likely future price hikes and rising royalty demands, so he believes a neutral stance remains appropriate.