Warner Music Group Corp (NASDAQ:WMG) is expected to deliver stronger revenue growth and improved margins over the coming fiscal year, according to a recent note from analysts at UBS, who point to rising subscription revenues and emerging artificial intelligence (AI) partnerships as key drivers.
The analysts project that fiscal 2026 could mark an inflection point for the music company.
“We believe WMG is positioned well to benefit from higher wholesale rates, solid subscriber growth and stream share gains, driving accelerating revenue growth in fiscal 2026, while the new deals with the AI platforms should provide upside in fiscal 2027,” they wrote.
UBS estimates WMG will generate approximately $7.1 billion in revenue for the full fiscal year, representing roughly 6% year-over-year growth. Margins are also forecast to expand, with operating income before depreciation and amortization (OIBDA) margins expected to reach about 23.9%, up from the prior year.
A key component of this growth outlook is subscription streaming. Analysts anticipate subscription revenue growth will move into double-digit territory as digital service providers implement further price increases. Advertising-supported streaming revenue is also set to grow, though at a more moderate pace.
Within WMG’s recorded music segment, revenue is projected to rise modestly in the near term, with stronger gains expected as pricing changes take effect. Publishing revenue is also forecast to increase, supported by continued growth in streaming activity.
The company’s global streaming share has shown notable improvement. UBS estimates WMG’s share reached around 25% in the fiscal second quarter, up from roughly 20% a year earlier, with continued momentum into the following quarter.
In the United States, its share is also estimated to have increased significantly year over year. Analysts attribute these gains in part to releases from major artists including Bruno Mars, Coldplay, Ed Sheeran, and Arctic Monkeys.
Looking further ahead, UBS highlights artificial intelligence as a potential upside catalyst. The firm notes that recent agreements between WMG and AI platforms could open new monetization channels beginning in fiscal 2027.
These developments are expected to be a focus of broader industry discussions, including upcoming events examining AI’s impact on music and other entertainment sectors.
In terms of valuation, UBS maintains a ‘Buy’ rating and $40 price target on WMG shares, citing what it views as an attractive risk-reward profile. The analysts noted that the company is currently trading at a multiple below some peers, suggesting room for upside if projected growth and margin improvements materialize.
Shares of Warner Music Group are currently trading at about $28, down almost 9% so far this year.