Morgan Stanley Names Spotify a New Top Pick, Citing AI Tailwinds and Strong Growth
Morgan Stanley has added Spotify (NYSE: SPOT) to its list of Top Picks, highlighting the company’s accelerating growth, AI-driven opportunities, and solid pricing momentum.
In a note released this week, the investment bank reaffirmed its Overweight rating and price target of $800 on Spotify. Analyst Benjamin Swinburne said the streaming giant is benefiting from a new pricing cycle and technological innovation.
“We remain Overweight on SPOT shares and see roughly 20% upside to our $800 target,” Swinburne wrote, adding that “AI continues to act as a major tailwind for growth.”
AI and Pricing Boost Expected to Drive Revenue Gains
Morgan Stanley anticipates revenue acceleration heading into next year, supported by artificial intelligence integration and subscription price increases. The firm expects upside potential in EBIT, noting that Spotify’s ongoing use of AI could deliver tangible financial benefits over the coming years.
Recent platform upgrades include enhancements to both the free and Premium tiers. Swinburne noted that the new hour of on-demand listening in the free version could boost both monthly active users (MAUs) and Premium subscriptions.
Spotify also raised prices by 14–17% in Australia, which Morgan Stanley believes could serve as a blueprint for other international markets in 2026, with a U.S. price hike expected by early 2025.
Morgan Stanley Forecasts Strong Long-Term Growth
The bank’s investment outlook calls for a 14–15% compound annual revenue growth rate (CAGR) through 2028, and up to 17% in its bull case.
It also expects a 40% EBIT CAGR during the same period, supported by Spotify’s 90%+ subscription-based model.
Morgan Stanley’s $800 price target implies Spotify will trade at roughly 27.5x 2030 free cash flow per share (FCF/share). The firm projects 2027 FCF per share of $22–23, with a bull-case estimate of around $27.
