Peloton Interactive (NASDAQ:) has been struggling to regain its footing since the pandemic-era fitness boom faded. After years of declining sales and multiple rounds of layoffs, the company unveiled what CEO Peter Stern called “a new chapter” on October 1, 2025: a complete product overhaul centered around artificial intelligence.
The announcement included new AI-powered equipment, expanded wellness offerings, and significant price increases across both hardware and subscriptions. However, the market’s reaction was swift and brutal, with Peloton’s stock plummeting as much as 10% following the reveal. This raises serious questions about whether the AI pivot can reverse the company’s fortunes or if it represents a misstep that will further alienate struggling customers.
The transformation comes at a critical juncture for Peloton, which has seen its stock collapse 94% from its 2020 peak and revenue decline for four consecutive years. With the company projecting another 2% revenue drop in fiscal 2026, management is betting that artificial intelligence can provide the differentiation needed to reignite growth.
Yet the simultaneous decision to raise prices, at a time when the company desperately needs to expand its customer base, has left investors and analysts questioning the strategy’s viability.
Peloton’s AI Revolution Fell Flat
On October 1, 2025, Peloton launched its most comprehensive product refresh in company history, introducing the Peloton Cross Training Series and an AI-powered platform called Peloton IQ. The new lineup includes redesigned versions of all five connected fitness devices: the Cross Training Bike, Bike+, Tread, Tread+, and Row+. Each features an advanced Swivel Screen that allows users to seamlessly switch between cardio, strength training, yoga, and other exercises.
The centerpiece of the announcement is Peloton IQ, an artificial intelligence and computer vision system that transforms the equipment into a personalized digital trainer. The premium “plus” models (Bike+, Tread+, and Row+) include built-in movement-tracking cameras that provide real-time form feedback, count repetitions, and suggest appropriate weights during strength workouts.
The AI analyzes workout history, performance data, and information from third-party wearables like Garmin, Fitbit, and Apple Health to deliver customized recommendations, performance estimates, and adaptive weekly workout plans.
Beyond hardware improvements, Peloton IQ introduces several software-driven features designed to enhance personalization. The system offers a Workout Generator that creates custom routines based on specific muscle groups users want to target, Performance Estimates that provide projected output ranges for classes, and weekly Insights and Analysis with actionable recommendations.
Chief Product Officer Nick Caldwell emphasized that Peloton’s advantage lies in “pairing intelligent software with premium hardware” to deliver what he called “a more advanced take on AI personal coaching” than competitors can offer.
The product refresh extends beyond AI to include partnerships aimed at supporting comprehensive wellness. Peloton announced collaborations with the Hospital for Special Surgery for musculoskeletal injury prevention programming, Halle Berry’s Respin Health for perimenopause-focused content, and acquired the Breathwrk app for stress reduction and sleep improvement.
The company also introduced community features like Official Peloton Teams led by instructors and Club Peloton, a recognition program that rewards consistency with points and potential early access to content.
The Price Hike That Shocked Members
Accompanying the exciting product announcements was news that many current and potential customers found far less welcome: significant price increases across Peloton’s entire ecosystem.
Hardware prices rose an average of 11%, with increases ranging from 6% for the Row+ to 17% for the base Bike. The entry-level Cross Training Bike now costs $1,695 (up $250 from $1,445), while the premium Bike+ jumped to $2,695 (up $200). The most expensive equipment, the Tread+, now carries a $6,695 price tag—a $700 increase from its previous $5,995 cost.
Subscription fees saw even steeper hikes, with an average increase of 19% across membership tiers. The All-Access membership, required for full use of Peloton’s connected hardware, rose from $44 to $49.99 monthly—a 14% jump. The App+ Membership climbed from $24 to $28.99 (a 21% increase), while the App One Membership increased from $12.99 to $15.99 (23% higher).
The timing of these price increases has raised eyebrows among industry observers. Peloton has been desperately trying to reverse declining equipment sales, which plummeted from $3.1 billion in fiscal 2021 to just $817 million in fiscal 2025. The company had previously introduced payment plans and partnered with retailers like Amazon and Dick’s Sporting Goods specifically to make its products more accessible to budget-conscious consumers.
Now, with higher prices across the board, analysts worry the company is moving in the opposite direction at precisely the wrong moment.
The concern is straightforward: as Peloton struggles to attract new customers in an increasingly competitive fitness market, raising prices could further limit the pool of potential buyers willing to make the investment, especially when quality alternatives exist at lower price points.
Will Peloton’s AI Gamble Pay Off?
The market’s immediate verdict on Peloton’s AI strategy was decidedly negative. Following the October 1 announcement, shares fell as much as 10% to $8.10—the biggest intraday decline since June 17, 2025.
As of October 10, the stock was trading around $7.35, down approximately 15% year-to-date and still hovering near its 52-week low of $4.63. The stock’s performance reflects deep skepticism about whether AI features and higher prices represent the right formula for a company whose revenue has declined for four straight years.
Potential Advantages of the AI Strategy: The introduction of Peloton IQ addresses a genuine market opportunity, as strength training and cross-training have become increasingly popular among fitness enthusiasts. The AI-powered form correction, rep counting, and personalized coaching could genuinely differentiate Peloton from competitors that offer generic workout content.
Analysts project a 123% rise in earnings for the current year, suggesting some believe the turnaround strategy has merit. The company’s integration of data from multiple sources, workout history, wearables, and real-time performance, creates a comprehensive personalization engine that competitors may struggle to replicate. Additionally, the expansion into wellness partnerships and breathwork could broaden Peloton’s appeal beyond its traditional cycling-focused customer base.
Significant Drawbacks and Risks: However, the strategy faces substantial headwinds. The price increases directly contradict Peloton’s previous efforts to make products more accessible, potentially shrinking the addressable market at a time when the company desperately needs growth.
The premium Bike+ at $2,695 combined with the $49.99 monthly subscription creates a significant barrier to entry for middle-class consumers. Subscriber numbers have been declining, a trend unlikely to reverse with higher fees, and the company’s guidance projects yet another year of revenue decline to $2.4 billion in fiscal 2026.
Reddit commentary reflected consumer skepticism, with users noting that Peloton “has phased out” and the company has returned “full (bi)cycle from 2021,” suggesting the AI features may not justify the premium pricing in consumers’ eyes.
The Path Forward: Peloton’s survival depends on proving it can return to sustainable revenue growth. The company has successfully cut operating costs by 62% since fiscal 2022, narrowing losses and generating positive adjusted EBITDA of $403 million in fiscal 2025.
However, this cost-cutting approach has limits; eventually, reducing spending on marketing and R&D will make attracting new customers even harder. The AI gamble represents management’s bet that product differentiation through technology can command premium pricing and reverse declining sales trends.
For investors, the question remains whether to adopt a wait-and-see approach or view the current stock price as an opportunity. With shares down 94% from their 2020 peak, some value investors might be tempted by the low valuation. However, investing in shrinking businesses rarely produces strong returns, and Peloton needs to demonstrate actual sales growth before the stock becomes truly viable.
The company’s fiscal Q1 2026 earnings call on November 6, 2025, will provide the first indication of whether the AI strategy is gaining traction or if Peloton’s gamble has indeed fallen flat. Until then, the stock faces continued pressure, and any recovery will likely require clear evidence that customers are willing to pay premium prices for AI-enhanced fitness experiences.
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This article was written by Shane Neagle, editor in chief of The Tokenist.