Spotify (SPOT) shares are surging after the company gave investors a clearer long-term plan and announced a new AI partnership with Universal Music (UMGNF). Importantly, the streaming platform said that it expects revenue to grow at a mid-teens compound annual rate through 2030, with gross margins reaching 35% to 40%. Spotify also described its longer-term “north star” as reaching 1 billion subscribers and $100 billion in revenue, showing that the company is trying to prove it can become much more than a music-streaming app.
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A major part of that strategy is AI. Under Spotify’s deal with Universal, users will be able to create covers and remixes using the voices of artists and songwriters who choose to participate. The feature will launch as a paid add-on for premium users, thereby giving Spotify another revenue stream while also creating a new way for artists to make money. Co-CEO Gustav Söderström told investors that there is still no true media player built for both public and private content in the generative AI era, and Spotify believes it can become that platform.
The update comes at an important time for Spotify, which is going through a leadership and product shift after founder Daniel Ek stepped down as CEO earlier this year. The company is also expanding into podcasts, audiobooks, creator subscriptions, AI-powered review summaries, chatbot booking support, and even early concert ticket access for megafans. Since 2022, Spotify said it has added more than 340 million new users and over 110 million subscribers. Still, AI remains a sensitive issue for the music industry, as labels continue trying to protect artists from copyright misuse while companies like Suno and Udio face lawsuits and settlements over AI-generated music.
Is SPOT Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SPOT stock based on 20 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPOT price target of $591.09 per share implies 17.1% upside potential.
