Spotify’s position in the evolving music streaming landscape could be bolstered by Google’s recent foray into AI-powered music creation, according to a KeyBanc analyst. The development, rather than posing a threat, is viewed as potentially “more positive than negative” for the Swedish audio platform, signaling a broader industry shift towards integrating artificial intelligence into music experiences.
Justin Patterson, a Managing Director and Senior Research Analyst at KeyBanc Capital Markets, believes the introduction of AI music tools by tech giants like Google could ultimately drive overall engagement with music and, by extension, benefit leading streaming services like Spotify. This perspective comes as Google unveils its Music AI Sandbox, allowing users to experiment with generating music from text prompts. The potential for increased music consumption, fueled by AI-driven creativity, is a key factor in Patterson’s assessment.
Patterson’s analysis suggests that the increased accessibility of music creation tools, powered by AI, could lead to a larger pool of content and a more diverse range of musical styles available to listeners. This, in turn, could attract new users to streaming platforms and encourage existing subscribers to spend more time engaging with music. KeyBanc currently maintains a Buy rating on Spotify Technology SA (SPOT), with a price target of $675.00 as of February 5, 2025, despite recent foreign exchange headwinds impacting revenue and free cash flow estimates according to Investing.com.
Spotify’s Resilience Amidst Price Hikes
The analyst’s optimistic outlook arrives as Spotify continues to navigate a strategy of price increases. Despite raising subscription costs, KeyBanc research indicates a “incredibly strong” consumer willingness to absorb these changes. This resilience is attributed to the added value Spotify has delivered through new features, including audiobooks, AI playlist recommendations, and the integration of video into podcasts as reported by Yahoo Finance. The company’s ability to innovate and offer a compelling user experience appears to be mitigating the impact of higher prices.
However, KeyBanc recently lowered its price target for Spotify to $720, down from a previous $830, citing foreign exchange headwinds as detailed by GuruFocus. Despite this adjustment, the “Overweight” rating signals continued confidence in the company’s long-term prospects. Patterson has a 5-star analyst rating with an average return of 11.2% and a 53.19% success rate, covering the Communication Services sector, including Netflix, Spotify Technology SA, and Match Group.
Pinterest Insights and AI’s Commercial Applications
Patterson’s broader focus on the intersection of AI and commerce is likewise evident in his recent inquiries regarding Pinterest. On February 12, 2026, he questioned Pinterest CEO Bill Ready about the implications of “agentic commerce” – AI assisting users throughout the commercial journey – and how Pinterest’s visual feed facilitates this without explicit user prompts according to Fintool. Ready explained that Pinterest’s visual search, discovery, and personalization capabilities allow users to locate products they necessitate even before articulating their desires.
This line of questioning highlights a growing industry interest in leveraging AI to enhance the user experience and drive commercial outcomes. The success of platforms like Spotify and Pinterest in integrating AI-powered features will likely be a key determinant of their future growth and market position.
What to Watch Next
The coming months will be crucial in observing how Google’s AI music tools evolve and how Spotify responds to this new competitive dynamic. Monitoring consumer adoption of AI-generated music and the impact on overall streaming engagement will be key indicators. Tracking Spotify’s continued innovation in features and pricing strategies will provide valuable insights into its ability to maintain its market leadership. The interplay between AI-driven content creation and established streaming platforms promises to reshape the music industry in the years ahead.
What are your thoughts on the impact of AI on the music industry? Share your comments below and let us know how you think these developments will affect your listening habits.
