Universal Music Group NV (AMS:UMG)

Intro

Universal Music Group (UMG) is the world's largest music company, home to labels like Interscope, Capitol, Motown, Def Jam, and EMI, and to artists ranging from Taylor Swift and Drake to The Beatles and Bob Marley. The business operates in three segments – Recorded Music, Music Publishing, and Merchandising – across more than 60 countries. Its publishing arm alone administers nearly 4.5 million titles.

UMG was spun out of French conglomerate Vivendi and listed on Amsterdam's Euronext exchange in September 2021.

Valuation

At €15.66, UMG trades near its all-time low and roughly 47% below its May 2024 peak. The market cap sits at approximately €29 billion. On adjusted 2025 earnings per share of €1.03, the stock trades at a trailing P/E of around 15x – the lowest valuation the company has ever carried as a public entity. The dividend for 2025 totals €0.52 per share, translating into a yield of about 3.3%.

Full-year 2025 revenue came in at €12.5 billion, up 8.7% in constant currency, with subscription streaming – the core engine – growing close to 9% after stripping out one-off catch-up payments. Adjusted EBITDA rose at a similar pace. UMG generates substantial free cash flow, which underpins both the dividend and continued investment in artist development and acquisitions – most recently the closing of its Downtown Music deal, which adds over 5,000 clients and 4 million creators to its ecosystem.

So why is the stock cheap? Three things. First, AI anxiety – the market fears that generative music tools will cannibalise demand for human-created content. Second, a complex shareholder overhang involving the BollorĂ© family and French regulator AMF, which has created uncertainty about potential forced selling or corporate restructuring. Third, UMG shelved its planned U.S. listing in early 2026, citing market dislocation – removing a near-term catalyst that many investors had been counting on.

What's next?

The AI risk is real but, maybe, overstated. People don't just listen to "music" – they listen to Taylor Swift, to Kendrick Lamar, to Lady Gaga. That emotional connection with real artists is not easily replicated by algorithms. More importantly, UMG isn't sitting still. Throughout 2025, the company struck licensing and partnership deals with Udio, Stability AI, NVIDIA, Splice, and others – positioning itself to monetise AI rather than be disrupted by it. If AI-generated listening grows, UMG's catalogue and copyrights are the raw material those platforms need to license.

Management targets 8–10% compound annual revenue growth through 2028. Buying the world's dominant music rights company at 15x earnings, with a 3.3% dividend yield and high-single-digit organic growth, feels like picking up a quality asset at a cyclical-fear price – even though nothing about the business cycle has actually turned.

Current price

€15.66 per share

Disclosure

The author is currently long UMG.

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