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Bernstein Initiates Coverage of Spotify (SPOT) With an Outperform Rating

On June 3, Bernstein analyst Ian Moore initiated coverage on Spotify Technology S.A. (NYSE:SPOT) with an Outperform rating and assigned a price target of $825. The analyst is optimistic about the company’s ability to attract premium users and increase revenue through higher-priced subscription options, which supports his positive rating.

The initiation was part of Bernstein’s broader coverage initiation on the U.S. entertainment sector, which included similar Outperform ratings on names like Live Nation (NYSE:LYV), DraftKings (NASDAQ:DKNG), TKO Group (NYSE:TKO), and Warner Music (NASDAQ:WMG). Moore is constructive on companies that can directly monetize superfans through exclusive experiences, higher-tier pricing, and direct-to-consumer engagement.

A person on a laptop in the night, listening to Arabic music through a streaming application.

According to the analyst, Spotify stands out within the broader entertainment sector for its potential to drive strong long-term growth by catering to “superfans”, a highly engaged and price-insensitive segment of users. These superfans are expected to play a central role in the next phase of profitability for the entertainment industry, particularly in the music streaming sector.

Spotify’s planned superfan subscription tier is expected to be a key driver of growth, according to Moore. Once introduced, it is likely to see swift adoption among current users and new subscribers, boosting gross profit growth to the high 20% range and pushing long-term gross margins above 40%.

Furthermore, the demand for premium content and personalized experiences remains strong, which makes price increases and tiered subscription models more viable for music services. Spotify is well-positioned to benefit from this trend because of its global reach, focus on user experience, and expansion into podcasts and other audio formats.

Spotify is one of the world’s most popular audio streaming subscription services, with over 678 million users, including 268 million subscribers across more than 180 markets as of March 2025.

While we acknowledge the potential of SPOT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SPOT and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

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Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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