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Warner Music Group Corp (NASDAQ:WMG) is expected to see a normalization in market share during its fiscal third quarter while continuing to benefit from broader growth trends in the music industry, according to Bank of America.

The bank maintained its 'Neutral' rating and $35 price objective on the company, writing that WMG’s upcoming results should reflect a return toward more typical market share levels after several quarters of stronger-than-usual performance.

Shares of WMG traded hands at $29 on Wednesday afternoon, down about 5% so far this year.

“WMG continues to see the benefit of PSM escalators and/or recent price increases, and after several quarters of robust market share, there has been some mean reversion toward other labels,” Bank of America wrote. The firm added that the shift had been well telegraphed following WMG’s fiscal second-quarter results.

Bank of America expects subscription streaming growth could accelerate later in the year, supported by an additional PSM agreement rolling into the fourth fiscal quarter. The firm noted that recent agreements with digital service providers (DSPs) have improved visibility into subscription streaming growth and, alongside cost-cutting initiatives, could support multi-year earnings growth.

The analyst also highlighted artificial intelligence as a key area of focus for investors, with the technology presenting both opportunities and risks for the music industry. While concerns remain around synthetic content and potential disruption to traditional music models, Bank of America wrote that AI could create new monetization opportunities.

The firm pointed to Spotify’s recent investor day, where the streaming platform outlined plans for a potential higher-priced AI and “superfan” subscription tier. However, Spotify has not yet reached an agreement with WMG, despite announcing a deal with Universal Music Group (AEX:UMG), which Bank of America believes would be necessary before such a product could launch.

“Although the structure of these agreements remains uncertain, we see a path to win-win outcomes if AI-enabled premium tiers can drive further monetization of music content,” the firm wrote.

Bank of America maintained its fiscal third-quarter estimates for WMG, forecasting revenue of $1.81 billion and adjusted operating income before depreciation and amortization (OIBDA) of $417 million. For fiscal 2026, the firm kept its revenue forecast at $7.29 billion and adjusted OIBDA estimate at $1.72 billion.

The bank said it continues to view the risk-reward profile for WMG shares as balanced at current levels, citing improved visibility from recent DSP agreements.