When it comes to artificial intelligence (AI) stocks, investors tend to think of chip giants like Nvidia or Micron Technology. But AI is starting to create value for many companies, even those not operating at the industry’s frontier, and that spells an opportunity for investors.
Spotify (NYSE: SPOT) runs the world’s largest music streaming platform, and it’s betting big on AI to enhance the listening experience, which is boosting engagement and, therefore, revenue. The company reported a strong set of operating results for the third quarter of 2026 (ended Sept. 30) last week, which sent its stock soaring by more than 11%.
Missed AI’s “Act 1”? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
But the stock is still down 26% from last year’s record high as I write this on Oct. 27, so should investors take this opportunity to buy the dip, or will the recent recovery run out of steam?
Artificial intelligence is transforming Spotify
Most music streaming services offer the same content catalog, because a small handful of record labels control most of the industry’s rights, and they want their artists to reach as many listeners as possible. That means the primary way Spotify can differentiate its platform from the competition is by delivering a better user experience, and AI is central to its strategy.
AI is embedded in Spotify’s recommendation algorithm, where it learns what type of music each user likes, so it can feed them more of it. AI also powers a growing number of features, like Prompted Playlist which will curate a basket of songs based on a description provided by the user. But management is aiming to turn Spotify into the world’s first agentic media platform, which will introduce a range of unique capabilities, and some of them are already live.
For example, users can ask Spotify to analyze their listening history dating all the way back to 2008, and surface their favorite songs. It can also ask the platform to mix tracks together to create the perfect playlist, organized by factors like beats per minute. It can also recap an audiobook the user is listening to, up until the point they previously stopped.
Spotify can integrate with third-party agentic systems like OpenAI’s Dots and Meta Platforms‘ Muse, enabling users to control their audio environment while completing other tasks. For example, users can ask Muse to build a playlist through Spotify, tailored to a specific road-trip destination.
