UCAN Growth Acceleration and AI Monetization Progress Reinforce Pinterest’s Medium- to Long-Term Growth Thesis

Overview

The report believes Pinterest’s Q2’26 showed improving fundamentals: UCAN market execution drove faster revenue growth, users and engagement remained strong, conversion and consideration ad demand improved broadly, and revenue outperformance further drove adjusted EBITDA above expectations. Management is advancing a multi-year AI strategy around Pinterest Assistant, Performance+, AI bidding, and measurement capabilities, while expanding advertiser industry coverage. In the near term, the international advertising business is still affected by sales organization adjustments, tough comparisons, reseller effects, and foreign exchange, but Goldman Sachs believes the company can gradually replicate its UCAN experience in international markets.

Core views

The core investment thesis includes: first, UCAN revenue grew 18% year over year, showing that go-to-market strategy and sales execution are working; second, monthly active users grew 11% year over year, indicating stable platform user base and engagement trends; third, AI capabilities are extending from content personalization to ad delivery, bidding, and performance measurement, which may improve advertiser returns and expand budget share; fourth, demand from new industries such as financial services, travel, and healthcare reduces dependence on large retail advertisers; fifth, shopping content, direct response advertising, full-funnel budgets, and partnerships are expected to support multi-year compound revenue growth of around the mid-teens or higher and margin expansion.

Analysis framework

The report analyzes quarterly actual results versus market expectations, management guidance, user and regional revenue trends, product and ad tech progress, earnings forecast revisions, and valuation models. The target price uses an equal-weighted combination of EV/Sales and modified DCF, with the discount rate determined through CAPM; it also focuses on growth, financial returns, valuation multiples, and composite factor performance.

Methodology notes

• Relative valuationEV/Sales valuation method

  Applies a forward enterprise value-to-sales multiple to NTM+1 year forecasts

  Half of the target price is based on 13.0x EV/Sales, corresponding to a 0.23x EV/Sales-to-growth ratio, applied to NTM+1 year operating forecasts.

• Absolute valuationModified DCF valuation method

  Estimates terminal value using a forward EV/GAAP EBITDA multiple and discounts it back

  The other half of the target price applies 18.5x EV/GAAP EBITDA to NTM+4 year forecasts and discounts it forward by 3 years at a 12% discount rate.

• Cost of capitalCAPM

  Determines the discount rate using the risk-free rate, Beta, and equity risk premium

  The 12% discount rate is based on a normalized 10-year risk-free rate of 3%, an average Beta of approximately 1.3 for covered companies, and a 7% equity risk premium.

• Multi-factor analysisGoldman Sachs factor profile

  Compares stocks across growth, financial returns, valuation multiples, and composite dimensions

  The growth dimension uses forward revenue, EBITDA, and EPS growth; the financial return dimension uses ROE, ROCE, and CROCI; the valuation dimension uses metrics such as P/E, P/B, EV/EBITDA, and EV/FCF, which are converted into percentile rankings within the coverage universe.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Pinterest Inc. (PINS.US)

  The U.S. internet advertising and visual discovery platform stock directly covered by the report

  Strengths

  Accelerating UCAN revenue growth, stable monthly active users and engagement, continued upgrades to AI ad technology, expanded advertiser industry coverage, strong free cash flow, and active share repurchases.

  Weaknesses

  International advertising business recovery is relatively lagging, while near-term profitability is still affected by investments in AI infrastructure, sales and marketing, M&A integration, and stock-based compensation.

  Comparison

  The investment rating is based on PINS’s total return potential relative to Goldman Sachs’ internet and digital platforms coverage universe; valuation also references forward revenue multiples, EBITDA terminal value, and the cost of capital for covered companies.

  Risks

  Weak macro advertising budgets, intensifying competition, slowing user growth, weaker-than-expected international monetization execution, insufficient social commerce adoption, tightening privacy regulation, and fluctuations in growth-stock risk appetite.

Key data

• 12-month target price$30.00Raised from $28
• Current share price$25.58Reference price listed in the report
• Potential upside17.3%Based on the difference between the target price and current share price
• Q2’26 UCAN revenue growth+18% YoYImproved market execution drove growth acceleration
• Monthly active user growth+11% YoYUser growth and engagement remained strong
• 2026 revenue forecast$4.92bnPrevious forecast was $4.80bn
• 2026 adjusted EBITDA forecast$1.50bnPrevious forecast was $1.39bn
• 2026 GAAP EPS forecast$0.35Previous forecast was $0.40
• Q3’26 revenue forecast$1.21bnPrevious forecast was $1.19bn
• Q3’26 adjusted EBITDA forecast$352mnPrevious forecast was $330mn
• Year-to-date share repurchasesApproximately $2.0bnNearly 111m shares retired
• Market capitalization$14.4bnKey data in the report

Impact & implications

The results and forecast upgrades indicate that Pinterest’s growth drivers are shifting from pure user expansion to a combination of sales execution, ad product efficiency, and AI monetization. If Performance+, AI bidding, and measurement tools continue to improve advertiser returns, the company is expected to attract more direct response and full-funnel budgets and replicate its UCAN experience in international markets. Upward revenue revisions and improved operating leverage support the target price increase, but the downgrade to the 2026 GAAP EPS forecast also reflects that continued AI infrastructure investment, GPU capacity expansion, sales and marketing spending, tvScientific integration, and stock-based compensation will still weigh on near-term accounting profits.

Risks

• If macroeconomic headwinds persist or intensify, advertising spending and budget growth may come under pressure over the next several quarters.
• If monthly active user growth cannot stabilize or continues to slow, it will weaken platform scale and advertising inventory growth.
• International monetization may fall short of expectations due to competition, the macro environment, geopolitical risks, or sales team execution.
• International market sales organization adjustments, tough comparisons, and reseller effects may continue to weigh on near-term revenue performance.
• Q3 revenue guidance is affected by temporary factors such as unfavorable foreign exchange, the timing shift of Prime Day, and the disappearance of World Cup-related advertising spending.
• Shopping and full-funnel monetization face platform competition, insufficient advertiser or user adoption, and internal execution risks.
• Investments in AI infrastructure, GPU capacity, sales and marketing, and tvScientific integration may limit near-term margin improvement.
• Rising stock-based compensation may cause volatility in GAAP profit and earnings per share.
• Regulatory scrutiny of user data and privacy for media and e-commerce platforms may intensify further.
• The global macro environment and changes in investor risk appetite for growth stocks may increase share price volatility.

What to watch

• Whether UCAN revenue can continue to maintain high-teens growth and whether improvements in go-to-market strategy are sustainable.
• Whether international markets can replicate the UCAN sales and monetization model and resume growth after difficult comparisons.
• Adoption rates, ad conversion effectiveness, and advertiser return on investment for Pinterest Assistant and Performance+.
• Whether AI bidding, measurement, and personalization capabilities can bring in more direct response and full-funnel advertising budgets.
• The pace of expansion among advertisers in new industries such as financial services, travel, and healthcare.
• The actual impact of unfavorable Q3 foreign exchange, Prime Day timing shifts, and the gap from lost World Cup advertising spending.
• The impact of AI infrastructure and GPU investment on adjusted EBITDA, GAAP profit, and free cash flow.
• Whether stock-based compensation declines in Q3 as management expects.
• Whether shopping content and partnerships can drive larger-scale monetization.
• The pace of share repurchases and their impact on shares outstanding and per-share value.