Entertainment and Music Stocks to Buy to Play AI Trends

According to Goldman Sachs, the music industry is set to undergo fundamental changes, partly due to the impact of generative AI, and the new technology presents a “significant opportunity” for the sector. The stocks that are driving this trend are Live Nation, Warner Music Group, French digital music company Believe, China’s NetEase, and Universal Music Group. All of the stocks are on the company’s top conviction list. In a June 28 memo, Goldman analysts said, “Generative AI will greatly enhance the ability to create music and improve productivity.” They also suggested that investor concerns about AI-generated music, including a track reportedly made using the technology in April and featuring a “fake Drake,” were “overstated.” Companies like Deezer and Believe are using AI to detect when music tracks were created by AI, while publishers are working with streaming sites like Spotify to remove artificially generated tracks. analysts said. Goldman said the music industry is well-equipped to protect intellectual property because it’s dominated by three big companies that own the majority of artists’ catalogs. “We believe the music industry is on the verge of another major structural shift, given the continued under-monetization of music content, outdated streaming rights payment structures, and the introduction of generative AI,” Anna said. Lists added. Streaming has made it easier for people to access music than ever before, but analysts say the revenue is not commensurate with consumption. “For example, over the past five years, we estimate that his audio revenue per stream has declined by 20%, while Spotify’s revenue per music stream is a quarter of what Netflix has.” the bank said. Goldman likes event promoter Live Nation because he expects artists to tour more often due to the so-called globalization of music. He added that the industry will also revitalize as younger generations become more aware of performers through social media. “With our digital-first approach, we expect to continue to gain market share, especially in fast-growing emerging markets across Asia,” the bank said of Believe. Meanwhile, analysts say WMG is “one of the highest quality long-growth conglomerates within our coverage group,” while competitor UMG is on the European region’s conviction list. . “UMG has several competitive advantages, including its size, a clear and consistent track record in break artists, the depth and breadth of its catalog, and its ability to spot new trends early under the management of an experienced management team. We believe there are benefits,” the analysts said. Goldman chose NetEase, a Chinese internet company with a music streaming platform, to use AI in its music composition tool. — CNBC’s Michael Bloom contributed to this report.

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The music industry is set to undergo a fundamental change, partly due to the impact of generative AI, according to the company. goldman sachssaid the new technology presents a “significant opportunity” for the sector.

Five stocks rated as buys are listed as stocks responsible for the trend. live nation, warner music groupFrench digital music company Believe, China’s NetEaseand universal music group. All of the stocks are on the company’s top conviction list.

In a June 28 memo, Goldman analysts said, “Generative AI will greatly enhance the ability to create music and improve productivity.” They also suggested that investor concerns about AI-generated music, including a track reportedly made using the technology in April and featuring a “fake Drake,” were “overstated.”

Companies like Deezer and Believe are using AI to detect when a music track was created by AI, and publishers are working with streaming sites like, analysts said. spotify To get rid of artificially generated footprints.

Goldman said the music industry is well-equipped to protect intellectual property because it’s dominated by three big companies that own the majority of artists’ catalogs.

“We believe the music industry is on the verge of another major structural shift, given the continued under-monetization of music content, outdated streaming rights payment structures, and the introduction of generative AI,” Anna said. Lists added.

Streaming has made it easier for people to access music than ever before, but analysts say the revenue is not commensurate with consumption. “For example, it is estimated that his revenue per stream for audio has declined by 20% over the past five years, while his revenue per music stream for Spotify has fallen by a quarter. Netflix‘ said the bank.

Goldman likes event promoter Live Nation because he expects artists to tour more often due to the so-called globalization of music. In addition, younger generations becoming more aware of performers through social media will also boost the industry, he added.

“With our digital-first approach, we expect to continue to gain market share, especially in fast-growing emerging markets across Asia,” the bank said of Believe.

Meanwhile, analysts say WMG is “one of the highest quality long-growth conglomerates within our coverage group,” while competitor UMG is on the European region’s conviction list. .

“UMG has several competitive advantages, including its size, a clear and consistent track record in break artists, the depth and breadth of its catalog, and its ability to spot new trends early under the control of an experienced management team. We believe there are benefits,” the analysts said.

Goldman chose NetEase, a Chinese internet company with a music streaming platform, to use AI in its music composition tool.

— CNBC’s Michael Bloom contributed to this report.

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