Pinterest is winning the argument on AI costs and losing the one on growth

Pinterest Inc (NYSE:PINS) beat on revenue, beat on earnings, beat on users, raised its margin target for the year and then watched its shares fall more than 8% in extended trading. Revenue of $1.18 billion was up 18% year on year against expectations of $1.15 billion. Adjusted earnings of 43 cents a share came in well ahead of the 36 cents forecast, while adjusted earnings before interest, tax, depreciation and amortisation of $311 million beat a $270 million consensus. Monthly active users hit a record 640 million, up 11%, with Gen Z now accounting for more than half the base. The stock had climbed almost 6% during the session to $25.58 before sliding to around $23.45 after hours. Guidance problem The damage was done by the third-quarter outlook. Guidance of $1.19 billion to $1.21 billion implies growth of 13% to 15%, down from 18%, and lands almost exactly on consensus. Management pointed to identifiable one-offs, since World Cup spending added nearly a percentage point in the second quarter and will not repeat, Amazon's Prime Day shifted out of the third quarter into the second, worth roughly half a point in each direction, and currency is a modest drag. The explanation is credible, but it does not alter what the number says, which is that growth slows from here. That matters more for Pinterest than for most, because the shares are down 17% over the past year and the average analyst price target has been cut from about $35 to below $24. Meeting expectations is no rescue when the story needed an inflexion. Cheap AI bet The more interesting disclosure was how Pinterest runs artificial intelligence. Rather than paying for access to the largest proprietary systems, it builds small task-spec...