New York, Jan 23, 2026, 14:37 (EST) — Regular session
- Spotify shares climbed almost 3% in afternoon trading following an upgrade from Goldman Sachs
- Premium users in the U.S. and Canada now get access to a new AI-powered “Prompted Playlist” feature
- Investors are eyeing upcoming earnings and how the February price hikes will play out
Shares of Spotify Technology S.A. jumped on Friday, pushing higher in afternoon trading following a rating upgrade from Goldman Sachs. The stock gained roughly 2.8%, reaching $512.71.
This move is crucial as Spotify faces a critical period where investors will judge two key factors: if the price hikes hold, and if new features boost engagement enough to protect margins. The stock has struggled to gain traction following a tough run for many growth stocks.
Goldman analyst Eric Sheridan upgraded Spotify to “Buy,” though he trimmed his price target to $700 from $735, still signaling about 39% upside from Thursday’s close, Barron’s reports. He projects gross margin—the portion of revenue remaining after direct costs—to grow by 80 to 100 basis points annually over the next four years; one basis point equals 0.01 percentage point. Sheridan noted it’s “too early to tell” how AI will impact streaming but said Spotify’s scale and data position it well. 1
Spotify is pushing to keep subscribers engaged. On Thursday, it launched “prompted playlist,” an AI-driven tool for Premium users in the US and Canada. This feature lets listeners guide the algorithm with their own words and set “rules” to tailor the playlists. “Listeners don’t just want Spotify to understand them. They want to actively shape their own experience,” said Molly Holder, Vice President of Product Personalization, during a media briefing. 2
Spotify described the new feature in a company post as a way for users to “collaborate” with the app instead of just passively accepting recommendations. Playlists can update daily or weekly. “We hear from listeners all the time that they love playlists, but making their own can feel daunting,” said Sulinna Ong, Spotify’s global head of editorial. 3
Spotify is also wagering on conversion. The company has relied on Premium upgrades and price adjustments to stabilize revenue, while expanding podcasts and audiobooks to hold listeners’ attention for longer periods within the app.
Traders are eyeing data on whether features such as prompted playlists boost listening time enough to back up price hikes. They’ll also keep a close watch on ARPU — average revenue per user — and if advertising revenue moves in step with subscriptions, given that ads tend to fluctuate with the wider economy.
Competitive pressure shows no signs of easing. Spotify is battling Apple Music, Amazon Music, and YouTube Music for listener attention, all while working to make its recommendation engine feel less robotic and more personal.
However, higher prices risk driving up churn, while new AI features come with steep operating costs and challenges in managing errors. Investors remain wary of how fast Spotify can boost revenue without losing ground to royalties and other content expenses.
Spotify’s quarterly report drops Feb. 10, and all eyes will be on guidance, subscriber numbers, and clues about how pricing and the new AI features are performing. 4
