Spotify Technology shares SPOT rose on Thursday after the music streaming company forecast fourth-quarter operating income above Wall Street expectations, supported by subscriber growth and investments in artificial intelligence-powered features.
The stock gained 8.6% in trading, outperforming a broader market decline driven by renewed concerns about AI spending and technology valuations.
Spotify reported revenue of €4.97 billion ($5.58 billion) for the three months ended September 30, slightly below analysts’ estimates of €4.98 billion, according to LSEG data.
Earnings per share came in at €2.48, compared with estimates of €2.80.
The results highlighted continued growth in Spotify’s subscriber base, while its outlook suggested that profitability could improve as the company seeks to attract more users through personalised listening features.
Spotify forecasts fourth-quarter profit above estimates
Spotify expects fourth-quarter operating income of €820 million ($920.53 million), exceeding analysts’ average estimate of €813.4 million, according to LSEG data.
The company also forecast revenue of €5.2 billion for the current quarter, alongside an increase in premium subscribers to 316 million from 306 million in the third quarter.
The projected addition of 10 million premium subscribers exceeds analysts’ expectations of approximately 314.7 million subscribers for the fourth quarter.
Spotify’s monthly active users increased 1% sequentially to 788 million in the third quarter.
However, its forecast of 818 million monthly active users for the fourth quarter was slightly below analysts’ estimate of 819 million.
Third-quarter operating income reached €672 million, broadly matching the Visible Alpha-compiled analyst estimate of €671.8 million.
The company’s fourth-quarter forecast indicates a further improvement in operating income, potentially easing investor concerns about rising costs.
AI-powered features remain central to Spotify’s growth strategy
Spotify has been investing in artificial intelligence to improve music discovery, user engagement and personalisation.
Its features include AI DJ, which curates personalised music selections with spoken commentary, and prompt-based playlists that allow users to describe their preferred mood or listening experience.
The company is relying on these tools to attract new subscribers and encourage existing users to spend more time on its platform.
It also faces competition from emerging AI music-generation services such as Suno and Udio.
Spotify’s third-quarter operating income was affected partly by higher marketing and cloud and AI spending.
The company said expenses were driven by temporarily elevated investment in these areas.
However, the forecast for higher fourth-quarter operating income suggests that Spotify expects to improve profitability while continuing to invest in its platform.
Co-CEO Alex Norström said in a statement that the company was investing when it identified opportunities for growth and that its costs were moderating.
Licensing agreements expand Spotify’s AI music ambitions
Spotify has also taken steps to establish licensing arrangements for AI-generated music.
Earlier this week, the company announced a deal with music distributor Believe for an upcoming paid tool designed for fan-made AI covers and remixes.
It has also signed licensing agreements with Universal Music Group, Merlin and Kobalt for the tool.
These agreements come as the music industry navigates the implications of generative AI and the use of existing music to create new content.
Despite Thursday’s gains, Spotify shares had fallen more than 8.5% in 2026 before the latest trading session.
The company’s latest outlook provides investors with a measure of confidence in its subscriber growth and profitability prospects.
Its ability to convert AI-driven engagement into sustainable revenue and earnings growth remains an important factor in assessing its performance.
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