Summary
Jefferies has reiterated a Buy rating on Spotify and set a $650 price target after Google made its Lyria 3 music-generation capability available in the Gemini app. The target implies roughly 36% upside from the stated current share level of $477.58. Jefferies’ analyst highlighted that the main news is broader access to Lyria 3 rather than new underlying capability, and the firm continues to view Spotify as well positioned to gain from wider adoption of music-generation tools.
Jefferies’ view and the Lyria 3 launch
Jefferies kept its Buy recommendation and $650 price objective on Spotify (ticker: SPOT) following Google’s announcement that Lyria 3 is now available through the Gemini app. James Heaney, the Jefferies analyst covering the stock, described the announcement as an expansion of access rather than the introduction of an entirely new music-generation engine, noting that Lyria previously existed.
The firm argues that as music-generation supply grows, value will accrue to distribution platforms. Jefferies sees Spotify as having the strategic positioning to shape how its own AI messaging evolves, supported by prospective product moves including a possible AI-driven remixing feature and the company’s scheduled Analyst Day in May. Heaney also briefly outlined competitive risks tied to YouTube/Google and to AI-native entrants such as Suno.
Market context and financials
At a market capitalization of $98.6 billion, Spotify remains a major player in the Entertainment sector. The company posted 9.7% revenue growth over the prior year. A financial-data service rates Spotify’s overall financial health as "GREAT," assigning a score of 3.03 out of 5.
Analyst sentiment around the stock skews bullish: the consensus sits at 1.61 on a scale where that corresponds to a Strong Buy. Reported analyst price targets span a wide range, from $417 at the low end to $792 at the high end. Jefferies’ $650 target sits within that band and implies about 36% upside from the referenced trading level of $477.58.
Investors should also note the company’s next scheduled earnings release, expected on April 29. Analysts have penciled in earnings per share of $15.51 for fiscal year 2026.
Other analysts: mixed but generally positive
Several other brokerages have published differing views in recent commentary. Cantor Fitzgerald observed that Spotify’s fourth-quarter revenue largely met expectations while operating income exceeded prior estimates by 8%; Cantor Fitzgerald set a $525 price target and retained a Neutral rating, citing valuation concerns.
Bernstein reiterated an Outperform rating and a $650 price target, pointing to strong Q4 results and favorable guidance for the first quarter. Pivotal Research moved in the opposite direction, downgrading Spotify from Buy to Hold and trimming its price target to $420, expressing worries about the broader streaming market despite Spotify’s share. Benchmark continued to endorse Spotify with a Buy rating and a $760 price target, highlighting the company’s advantages around AI-related initiatives.
Analyst perspectives on Google’s feature and competitive implications
Google’s addition of Lyria 3 to Gemini introduced near-term volatility in perceptions of competitive dynamics, but some analysts view the move as potentially advantageous for Spotify because wider adoption of music-generation tools could expand distribution opportunities. Jefferies’ view is that broader access strengthens the case for platforms that control distribution, and Spotify remains a key beneficiary if it successfully frames its AI strategy.
Conclusion
Jefferies’ reaffirmation of a Buy rating and a $650 price target rests on the premise that increased availability of music-generation technology will channel value toward distribution leaders. That thesis is supported by company fundamentals such as near-10% revenue growth and a sizable market cap, but other brokerages express a range of opinions on valuation and market risk. With an upcoming Analyst Day in May and quarterly results due April 29, investors will have additional data points to reassess Spotify’s position amid expanding AI-driven music capabilities.