Breakfast News: SPOT's Profit Forecast Out of Tune

Breakfast News: SPOT’s Profit Forecast Out of Tune

April 28, 2026

Source: Image created by Jester AI.

1. Spotify Earnings Unwrapped: Why the Stock Fell

Spotify (SPOT 2.17%) fell over 9% ahead of the market open as results showed ad-supported revenue decreased by 5% year over year, with concerns about growth for the coming quarter. Revenue grew by 10% year over year, reflecting a 9% subscriber growth rate.

• **Q2 profit guidance below expectations: **The outlook for operating income and premium subscriber growth for the coming quarter disappointed investors, signaling slowing growth in major markets such as the U.S.
• “All of our KPIs met or exceeded guidance”: Headline revenue came in line with guidance, with activation tools including advanced AI-powered personalization in beta launch and mobile free tier enhancements driving accelerated user growth. The stock is outperforming the S&P 500 by 78% since the January 2022 Stock Advisor recommendation by Team Rule Breakers.

2. GOOG Joins Peers in Classified AI Race

The Information reports Alphabet (GOOG +0.41%) has signed an agreement with the U.S. Department of Defense, allowing the government to use its AI models for classified work, as more companies make their tools available for public sector use.

• “The AI system is not intended for… domestic mass surveillance or autonomous weapons… without appropriate human oversight and control”: The details of the contract, although not verified, allows the government to use the AI models for “any lawful government purpose,” with caveats around human oversight.
• Big Tech continuing to shake hands with the Pentagon: The deal would mark another notable agreement between major tech and AI labs and the government, building on existing arrangements with Microsoft (MSFT 1.33%), Anthropic, OpenAI, and more.

3. Tuesday’s Notable Rule Breakers Earnings

• American Tower (AMT 1.91%) will report ahead of the market open, with investors waiting to see if the outlook of slowing growth provided by management last quarter manifests itself, or if data center demand can help to offset things.
• Waste Management (WM 2.75%) releases results after the market closes. The Stock Advisor rec by Team Rule Breakers posted record earnings last quarter, supported mainly by price increases in core waste collection and disposal.
• Booking Holdings (BKNG 3.17%) reports following the closing bell. Recommended by both Team Rule Breakers and Team Hidden Gems, the company did well in the previous quarter, with gross bookings up 16%. Regarding the risk of AI disruption, Fool contributing analyst Dan Caplinger said “consumer behavior is full of inertia and even when you have 100% proven technology, it takes a lot of people a long time to go ahead and adopt that technology.”

4. Your Take

**Mastercard **(MA 1.04%), **Cloudflare **(NET 23.53%), and **Prologis **(PLD +1.25%) are each lagging the S&P 500 since being recommended across the last five years in Hidden Gems.

If your portfolio comprised just these three companies and you bought each of them at the start of the year with the same amount of money and had to buy more shares in one, completely close your position in another, and hold the final stock, what are you choosing to do and why?

Debate with friends and family, or become a member to hear what your fellow Fools are saying!