Should You Invest in Spotify (SPOT)?

Sands Capital, an investment management company, released its “Sands Capital Technology Innovators Fund” Q2 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned 26.0% (net) in the second quarter compared to a 21.9% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. Easing geopolitical concerns, renewed AI optimism, resilient macroeconomic data, strong corporate earnings, and technical tailwinds boosted the markets for a quick recovery in the quarter. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its second-quarter 2025 investor letter, Sands Capital Technology Innovators Fund highlighted stocks such as Spotify Technology S.A. (NYSE:SPOT). Headquartered in Luxembourg City, Luxembourg, Spotify Technology S.A. (NYSE:SPOT) offers audio streaming subscription services. Spotify Technology S.A. (NYSE:SPOT) shares posted a return of -11.80% over the past month and appreciated by 111.70% over the last 12 months. On July 24, 2025, Spotify Technology S.A. (NYSE:SPOT) stock closed at $681.42 per share, with a market capitalization of $139.729 billion.

Sands Capital Technology Innovators Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its second quarter 2025 investor letter:

“Spotify Technology S.A. (NYSE:SPOT) is the world’s largest subscription streaming audio service by market share. Recorded music has seen significant distribution shifts—from vinyl to cassette to CDs—over the past 50 years. Today, streaming accounts for the bulk of industry revenue, and we view streaming as the natural end-state, given the consumer value proposition and balance of power between artists and labels. Within streaming, Spotify has outsized market share and user engagement. This has resulted in relatively inelastic demand and, in turn, pricing power. We ultimately view the addressable market as anyone with internet access globally. Unlike with video streaming, consumers tend to subscribe to only a single audio streaming service. Spotify’s leadership position has become further entrenched with music labels’ growing dependence on streaming revenue. Over our five-year horizon, we expect gross margin improvement from advertising and partnership agreements with labels, with operating margin improvement also driven by cost discipline.”

Jim Cramer Recommends Buying Spotify (SPOT) Shares During “Periodic Moments of Underperformance”

A person wearing headphones listening to an audio streaming service.

Spotify Technology S.A. (NYSE:SPOT) is in 25th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 106 hedge fund portfolios held Spotify Technology S.A. (NYSE:SPOT) at the end of the first quarter, which was 101 in the previous quarter.  While we acknowledge the risk and potential of Spotify Technology S.A. (NYSE:SPOT) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Spotify Technology S.A. (NYSE:SPOT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Spotify Technology S.A. (NYSE:SPOT) and shared the list of best global stocks to buy. In its Q2 2025 investor letter, Rowan Street Capital reaffirmed its long-term conviction in Spotify Technology S.A. (NYSE:SPOT). In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.