Why Sirius XM Holdings Rallied Nearly 50% in the First Half of 2026

Shares of satellite radio business Sirius XM Holdings (NASDAQ: SIRI) rallied 47.7% in the first half of 2026, according to data from S&P Global Market Intelligence.

Sirius is an interesting value stock and has been a long-term holding of Warren Buffett's conglomerate, Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), which added to its stake last year as the stock price fell to low levels.

With a low stock price heading into 2026, Sirius mounted a near-50% comeback as it inked a major partnership with advertising giant YouTube. In addition, Elon Musk's Space Exploration Technologies (NASDAQ: SPCX) initial public offering put a spotlight on the value of satellite spectrum, which Sirius owns as an asset on its balance sheet.

Sirius links its ad engine with YouTube, as space becomes a focus

Sirius came into 2026 trading at a bargain-basement valuation of around nine times earnings. While the company has a $9.7 billion debt load as of the last quarter and Sirius has been seeing net subscriber declines in recent years, its business is fairly stable and profitable, backed by recurring subscriptions and a smaller but growing advertising business.

That advertising business, which accounted for just under 20% of revenue last quarter, got a boost in April when Sirius XM announced a major deal with YouTube. Per the terms of the deal, advertisers can buy audio-focused ad inventory on YouTube through Sirius' advertising technology platform, SiriusXM Media. Sirius became an advertising solutions provider following its 2018 acquisition of Adwizz. Of note, this deal is exclusive and likely points to Sirius' experience delivering ads to higher-end audio consumers who can afford Sirius XM subscriptions.

In any case, the deal spurred at least one Wall Street analyst, Barton Crockett at Rosenblatt, to nearly double his price target on the stock, to $46 per share.

Sirius followed that piece of good news with a strong first quarter, in which both subscription and advertising revenue grew year over year, despite overall subscriber numbers continuing to slightly decline. While consolidated revenue grew only 1%, which isn't really much to write home about, it was a big deal for Sirius, which has been posting revenue declines in recent years. In addition, thanks to cost controls, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) grew by a higher 6%, and earnings per share rallied 20%.

The stock took yet another leg higher in late May, when a Sirius executive forecast improved free cash flow of $1.5 billion in 2027, up from the $1.35 billion guided for this year and $1.26 billion last year. The executive also touched on the potential monetization of Sirius' 35 MHz spectrum holdings, with a focus on partnerships and future optionality for Sirius.

As space-based broadband giant SpaceX went public in June, putting a renewed focus on space-based communications, Sirius' spectrum holdings, which SpaceX or a rival could plausibly buy or lease, appeared to reveal hidden value in the company, pushing the stock up even further.

Image source: Getty Images.

Where Sirius goes from here

After its first-half run, Sirius now trades at a higher but still cheap-looking 13 times trailing earnings per share, with a dividend yield of 3.6%.

So, things are certainly looking better for Sirius than they were at the beginning of the year. Still, the company will have to continue proving itself with sustained top-line growth, and will need to show new YouTube-related advertising revenues when the deal goes live in the Fall. One good quarter doesn't make a trend, and it appears the YouTube ad revenue acceleration may be somewhat baked into the stock price.

Billy Duberstein and/or his clients have positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.