Is Pinterest Worth Buying as AI Growth Meets Valuation and Cost Risks?

Pinterest, Inc. PINS combines double-digit revenue growth, solid projected earnings gains and a valuation below several benchmarks. Artificial intelligence (AI) is improving personalization and advertiser tools, adding to the growth case.

The key question is whether that monetization progress can outrun higher infrastructure costs, uneven international execution and weaker estimate revisions. The setup offers upside, but the risk-reward is not one-sided.

Pinterest's Valuation Discount Creates Room

PINS trades at 2.47X forward 12-month sales, below the Zacks sub-industry's 3.93X, the Zacks Computer and Technology sector's 6.36X and the S&P 500's 4.93X.

The discount is also sizable versus Pinterest's five-year median of 5.22X. That leaves room for multiple expansion if execution holds, but valuation alone does not establish that the shares are mispriced.

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PINS Growth Outlook Still Supports the Bull Case

Projected 2026 sales growth is 15.3%, while projected earnings-per-share growth is 27.5%. Revenues are expected to rise from $4.22 billion in 2025 to $4.87 billion in 2026 and $5.45 billion in 2027.

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The Zacks Consensus Estimate for 2026 earnings is $2.04 per share. The multiyear revenue and earnings trajectory supports the bull case, provided advertiser demand and execution remain on track.

Pinterest AI Spending Tests Operating Leverage

Pinterest's AI tools are designed to improve personalization and advertiser performance, but the investment burden is visible. Second-quarter non-GAAP cost of revenue rose 25% to $245 million, reflecting added graphics processing unit capacity and the full-quarter impact of tvScientific. Non-GAAP operating expenses increased 13%, driven by higher sales and marketing spending and research and development outlays for AI initiatives.

Adjusted EBITDA still grew 24%, faster than the 18% revenue gain, and its margin reached 26%. Management raised its 2026 adjusted EBITDA margin outlook to about 30%, showing that investment and margin expansion are progressing together for now.

Competitive pressure raises the bar. Meta Platforms, Inc. META said AI is accelerating its core business, underscoring the pressure on Pinterest as larger ad platforms deploy similar technology. Snap Inc. SNAP has launched AI Sponsored Snaps for interactive brand conversations, showing that AI-powered advertising is becoming a broader competitive focus.

PINS International Monetization is Still Uneven

Europe revenues rose 12% in the second quarter, while Rest of World revenue climbed 38%. Monetization remains far behind the United States and Canada, where average revenue per user was $8.30 compared with $1.35 in Europe and $0.23 in Rest of World.

Pinterest is extending its United States and Canada go-to-market approach internationally, supported by new leadership and broader demand initiatives. Management has described the transition as a multiquarter journey, leaving execution as an important variable.

PINS Signals Point to Patience, Not Aggression

For now, PINS looks more like a hold-or-wait setup than an aggressive buy. The valuation discount, projected growth and improving adjusted EBITDA margins are positives, but the 2026 earnings estimate has declined 5.2% in the past four weeks, tempering the case for urgency.

The stock currently carries a Zacks Rank #3 (Hold). Its Growth Score of B and VGM Score of B indicate relatively favorable growth and combined style characteristics, while its Value Score of C and Momentum Score of D are less supportive. The Zacks Style Scores complement the Zacks Rank rather than override it, making continued execution and estimate trends important to watch. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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