We recently published a list of 10 Hottest Mega-Cap Stocks of 2025. In this article, we are going to take a look at where Spotify Technology S.A. (NYSE:SPOT) stands against other hottest mega-cap stocks of 2025.
In 2024, companies poured money into Artificial Intelligence infrastructure in a bid to outpace each other in the AI race. The communication services and information technology sectors led the the large-cap stocks in terms of returns. AI-driven hype was so significant that for the first time since 1998, the S&P’s large-cap index registered two consecutive years of 20%+ gains.
2025 may well be the year of reckoning for AI. Some analysts have questioned the massive AI spending throughout the last year. Their concerns and predictions were dealt a reality check though when Bill Gates’ tech giant announced it planned to spend $80 billion on AI in fiscal 2025. Consequently, semiconductor stocks rallied, reminding everyone that the AI rally wasn’t over by any means.
Not surprisingly, the list is dominated by chipmakers, who we believe will be critical to the market’s returns this year. To come up with the 10 hottest mega-cap stocks of 2025, we considered stocks with at least $75 billion market capitalization.
A person wearing headphones listening to an audio streaming service.
Spotify Technology S.A. (NYSE:SPOT)
Spotify Technology S.A. (NYSE:SPOT) would usually make the news for exclusive content deals with artists or competition from other streaming services. But the company kicked off the new year by announcing a new partner program for content creators.
Like many other companies, Spotify (NYSE:SPOT) is poised to benefit from improving AI technologies. With a low-cost business model, the company is able to spend on AI implementation to improve its offerings. The platform has done a good job improving user engagement and with AI-driven programmatic advertisement tools, it has been able to monetize this user engagement really well. This also helps the company continue to operate with high margins.
Spotify (NYSE:SPOT) also holds considerable pricing power, something that is going to be a driver of growth heading into 2025. The firm recently hiked prices in over 60 markets, comfortably increasing its average revenue per user (ARPU) by 8.5%. At the same time, it was also able to minimize the loss of customers, proving it can easily improve its cashflows through price increases, if needed.
Overall, SPOT ranks 9th on our list of hottest mega-cap stocks of 2025. While we acknowledge the potential of SPOT as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as SPOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.