Pivotal downgrades Spotify on AI risk to paid music streaming

Pivotal Research analyst Jeffrey Wlodarczak downgraded Spotify (SPOT) to Hold from Buy with a price target of $420, down from $875. The firm views the company’s Q4 report as solid but sees “significant uncertainty” on its outlook for premium music streaming. Premium music streaming is undergoing “massive structural changes” related to AI, the analyst tells investors in a research note. Pivotal says these changes led to “major” reductions in its monthly active user and average revenue per use forecasts for Spotify. This resulted in a 50% reduction in its end of 2026 price target for the shares. The firm believes AI “could shrink the opportunity in paid music streaming, perhaps substantially over time.”