What was behind it? It’s all about the notion that AI will make many companies, especially in the software space, redundant. And that’s carried through a little to hardware.

It’s all very nuanced and, quite frankly, every company needs to be assessed on a case by case basis. One business that has long been under the cosh from AI is Pinterest (NYSE:PINS).

The worries are simple. If AI can suggest ideas, products and content directly, some investors fear people will have less reason to use a platform like Pinterest in the first place.

There are also concerns that bigger tech companies, armed with powerful AI ad tools, could make it harder for Pinterest to attract advertisers or charge premium rates.

Combined with slowing user growth in some markets, it helps explain why the shares have struggled.

How we got here

Like many of its peers, AI has helped Pinterest build in recent years. It has improved efficiency in the back office while improving the relevancy of search results. You’ll also notice that a lot of the content on the site is already AI-generated.

And while that drove the stock higher in the early part of 2025, broader fears about AI super apps pushed the stock lower in the second half of the year. It’s now down 50% from its highs.

The company is currently trading at around 10.8 times forward earnings despite offering earnings growth around 16%. This puts it at a 60% discount to the information technology sector.

But we’re in a strange position where the valuation actually isn’t the biggest issue. It’s whether AI is an existential threat to the business or whether it can continue bringing in millions of users and generating advertising revenue.

My hunch

I never invest on a hunch, but on this occasion I’m making an assumption about how durable the business really is.

To me, Pinterest has a very high-intent user base. People use it to plan an event, put together an outfit, or get ideas for redecorating a home.

What Pinterest offers is essentially a digital mood board. It lets users explore ideas, compare options and narrow down what they actually want before taking the next step.

Could an AI super app improve on this? I’m not sure it can in interface terms.

What feels more compelling is how Pinterest can use AI to improve its own product — making recommendations more relevant, surfacing ideas faster and better matching users with content and products they’re likely to act on. 

This is not my normal data-heavy approach to investing. The stock is undeniably cheap, but I think there’s a misunderstanding about the durability of the business.

What’s more, there are still huge opportunities to monetise the user base outside of North America. It’s yet to do this despite being something of a legacy app.

Taking all this together, that’s why I think it’s worth considering.

The post A beaten-down tech stock at just 10.8x earnings… an ISA pick for February? appeared first on The Motley Fool UK.

The sell-off followed the company’s slightly disappointing third-quarter results coupled with below-consensus guidance for Q4. The social media firm posted earnings of $0.38 per share — up from $0.32 a year ago, but around $0.04 shy of expectations.

On a brighter note, adjusted EBITDA jumped 24% year-on-year to $306.1m, coming in $9 million ahead of forecasts. That pushed its adjusted EBITDA margin up to 29%, a 200-basis-point improvement from last year and comfortably above analysts’ projections.

Growth was driven by a surge in user activity. Monthly active users climbed 30%, while the average revenue per user ticked 5% higher. Together, that powered a 17% rise in total revenue to $1.05bn. That was bang in line with expectations.

Pinterest also showed strong cash generation, with free cash flow up 30% to $318.4m.

The concern

The primary concern for Pinterest lies in the existential risk posed by the rise of artificial intelligence (AI)-driven chatbots and their broader impact on the digital advertising and discovery ecosystem.

As advertisers increasingly turn to conversational models and generative tools (instead of traditional social platforms), Pinterest’s model — built around visual discovery and user-driven intent — may face erosion of its relevance.

This narrative compounds pre-existing concerns about losing ground to larger social media companies, which offer broader reaches and effective marketing operations.

My take

Personally, I believe the Pinterest platform and business model will prove resilient. I don’t typically make forecasts like that but I’m a firm believer in the power of discovery… and nobody does that better than Pinterest.

And I think many other people — not necessarily investors — feel the same way. In the third quarter, monthly active users hit 600m, up 63m year on year.

And then, when it comes to the stock, it simply looks undervalued. It’s now trading at 14.8 times forward earnings. Moving forward to 2026, that figure falls to just 11.8 times. These are huge discounts to the technology sector average.

What’s more, Pinterest has a really strong balance sheet. It has a net cash position of around $2.7bn, which is huge considering the market-cap’s currently sitting around $17bn. Adjusting the price-to-earnings ratio for net cash would show an even bigger discount to the industry average.

And while I except this is by no means a perfect company, there are bundles of opportunities within its relative underperformance. For example, in Q3, it registered average revenue per user (ARPU) of $1.78. That’s incredibly lower than peers like Meta.

With that in mind, I like to think there’s scope for the business to improve monetisation further in the coming years.

In short, I was a bull on Pinterest when it traded in around $25 a share in April and May. It surged, but has gone on to disappoint. We’re back down around $25 a share, but this time with a less exciting earnings outlook.

Nonetheless, I still think it’s worth considering. And while I’m sure analysts will pair back their forecasts too, the stock currently trades 65% below the share price target.

The post Down 21% in 24 hours, what’s happening to Pinterest stock? appeared first on The Motley Fool UK.

The key lies in consistency. Let’s imagine a new investor can put aside just £250 a month into a Stocks and Shares ISA. That’s £3,000 a year. If those funds are invested in a diversified portfolio that generates an average annual return of 7%, the portfolio could grow to around £125,000 after 20 years.

At that point, drawing a 5% income from the portfolio would provide more than £6,000 a year. While it may not replace a salary, it represents a valuable supplementary income stream, particularly in retirement.

Of course, the more we contribute and the more successful we are at investing, the larger the end figure. Indeed, £500 a month in contributions could build a pot in excess of £250,000 in the same timeframe, potentially generating over £12,000 annually at a 5% withdrawal rate.

The strategy isn’t about chasing quick wins, but about harnessing compounding. There are risks, of course. Stock markets are volatile, and returns are never guaranteed. But history shows that patient, regular investing has rewarded those who stick with it.

Even if starting with almost nothing, consistency and discipline can transform modest monthly contributions into a powerful second income portfolio over the long term.

Managing risk and investing for the future

Investors don’t have to take big risks to get stronger returns. However, some investments are inherently more volatile. My investments, for example, are definitely more volatile than most. However, they are driven by strong quantitive data, not blind hope.

One of the slightly less volatile companies I hold is Pinterest (NYSE:PINS). The visual discovery platform has steadily grown its user base to nearly 600m, with Gen Z now representing more than half of all monthly active users. That’s an important shift, as younger demographics not only shape consumer trends but also represent long-term monetisation potential for advertisers.

Management’s made impressive progress in turning Pinterest into a full-funnel advertising platform. Artificial intelligence (AI)-driven tools such as Performance+ have enhanced advertiser ROI, while partnerships, like the tie-up with Instacart, open new monetisation avenues in the food and beverage vertical. This should contribute to resilience, as performance-based budgets are less cyclical than pure brand advertising spend.

Importantly, the valuation isn’t stretched. Pinterest trades on a forward price-to-earnings ratio of around 19.8, falling to the mid-teens by 2026 if consensus estimates prove correct. That looks attractive given revenue growth in the mid-teens and strong free cash flow potential.

The main risk is margin pressure if ad budgets tighten or AI investments overshoot. Still, I believe investors should consider Pinterest as a growth stock with strong balance sheet and a strengthening competitive position.

The post Almost nothing saved? Here’s how you can still build a second income portfolio by investing appeared first on The Motley Fool UK.

Historically, the stock market has delivered average annual returns of around 8%–10%. At a 10% growth rate, a £15,000 investment left untouched could compound into roughly £300,000 in 32 years. From there, a 5% yield could generate £15,000 in annual passive income — essentially turning savings into a salary.

That’s one way to do it. But there’s a way to get there faster.

By adding just £250 per month and reinvesting all returns, an investor could reach nearly £300,000 in just 20 years, assuming that same 10% growth. That’s less than half the time compared to a lump sum alone.

Here’s how the numbers stack up:

• After 10 years: approximately £91,800
• After 15 years: approximately £170,400
• After 20 years: approximately £299,800

Compounding is the secret sauce

This impressive end result comes from combining regular contributions with compounding returns. Each monthly deposit has the chance to grow and multiply over time, accelerating wealth creation. Just look at how the accrued interest grows over time.

To protect gains and income from tax, investments can be held within a Stocks and Shares ISA, where both capital growth and dividends are shielded from HMRC.

So, what’s key to success? Patience, consistency, and a long-term mindset. Dividend-paying shares, low-cost index funds, and global equity trusts can all play a role in building a resilient, income-generating portfolio.

It’s a simple idea — but one that could change the trajectory of a financial future. However, investors should be wary that they can lose money, especially over the short term.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Investing to beat the market

Novice investors may wish to start their investing journeys by buying index tracking funds. This is a super diversified way to get going.

However, more ambitious investors may wish to pick individual stocks. One stock I like is Pinterest (NYSE:PINS). It looks attractively valued for a platform with strong earnings momentum and growing AI integration. The company sits on a net cash position of $2.5bn and trades at just 19.9 times forecasted earnings for 2025 — falling to 10.6 by 2028 based on current consensus.

Analysts expect earnings growth of nearly 40% in 2025, driven by improved ad monetisation, deeper engagement, and AI-powered content curation. Pinterest’s ability to link visual discovery with shopping makes it uniquely positioned in the social commerce space, in my view.

However, the key risk is competitive pressure. Larger platforms like Meta and TikTok are also investing heavily in AI and commerce, and Pinterest’s smaller scale could limit its reach and pricing power in digital ads.

That said, with strong financials, consistent user growth, and an improving margin profile, I believe the shares are worth considering at current levels.

The post £15,000 in savings? Here’s a smart plan that could turn that into £15,000 of passive income appeared first on The Motley Fool UK.

For example, shares in Pinterest (NYSE:PINS) currently trade at a price-to-earnings (P/E) ratio of 14 and I think the firm has some good growth prospects. But I’m not in a rush to buy this one.

Growth

Pinterest currently generates $1.52 in revenues per user, which translates into around 7.6c in operating income. But I think there’s scope for this to increase significantly in the future.

Meta Platforms, for example, achieves $13.65 in sales for each person on Facebook, Instagram, and WhatsApp. And with around seven times as many users, it should generate better returns.

Pinterest, however, might have something unique. It has unusually good data about its users and their interests and there might even be a class of people who are on Pinterest but not Instagram. If it can achieve $2 in revenues per user – well below what Meta achieves – its operating profits could more than double. And at first sight, the share price doesn’t seem to reflect this possibility.

Earnings

Officially, Pinterest shares trade at a P/E multiple of 14. But there’s a reason investors shouldn’t just look at one ratio to work out whether or not a stock is cheap. In this case, the company’s earnings over the last 12 months were boosted by a one-off tax benefit.

The value of this was around $1.6bn, which accounts for around 90% of its net income. Adjusting for this, the stock currently trades at a P/E ratio of around 97. That’s much less attractive, but it’s not the only way of valuing the business. 

One-off tax gains aside, Pinterest’s free cash flows are actually much higher than official net income. So does the stock look more attractive from this perspective?

Free cash flows

Over the last 12 months, Pinterest has generated $952m in free cash. A market value of $26.5bn means this implies a multiple of around 28, which is high but not outrageous.

The trouble is, the company also issued $791 in stock-based compensation. And this almost entirely offsets the cash generated by the social media business.

In order to avoid diluting shareholders, Pinterest has to buy back the shares it has issued to employees. But once it has finished doing this, the free cash remaining is around $150m. That implies a multiple of 177, which is high by any standard. So while the company might have some strong growth prospects, its shares are a lot more expensive than they look at first sight. 

Final Foolish thoughts

As a business, I quite like Pinterest. But I’m not convinced the stock’s the bargain it looks like at first sight – either on an earnings basis, or in terms of free cash. 

A one-off tax benefit means earnings per share are higher than they might otherwise be. And high stock-based compensation offsets a lot of the firm’s cash generation.

As a result, I don’t think the current share price is the bargain it appears to be at first sight. So I don’t see the stock as an obvious opportunity for me at the moment.

The post At a P/E ratio of 14, should Pinterest be on my list of stocks to buy? appeared first on The Motley Fool UK.

The mathematics are punishing: lose 50% on an investment, and you’ll need a 100% gain just to break even. Buffett’s focus on capital preservation — through buying quality businesses, insisting on a margin of safety, and steering clear of speculation — has allowed him to generate above-average returns for decades.

How can I ‘get rich’?

But what does ‘getting rich’ mean? For some, it’s financial independence or the freedom to retire early; for others, it’s simply security and peace of mind. Whatever your definition, Buffett’s approach offers a blueprint.

Consider an investor who puts away £500 per month for 35 years, compounding at 10% annually. The result is astonishing. By year 35, their portfolio could grow to nearly £1.9m, with the majority of that growth coming from compounding returns rather than contributions.

The key is not just chasing high returns, but avoiding big mistakes and letting time and discipline work their magic. Buffett’s strategy is a lesson in patience, research, and risk management. By focusing on quality, understanding what you own, and refusing to let losses spiral, investors can steadily build wealth and, potentially, retire far earlier than they ever imagined.

The above graph shows the path to £1.9m in 35 years. This would be enough to comfortably deliver around £90,000 annually (tax-free in an ISA) without touching the principal.

However, it’s worth noting that £90,000 in 35 years is worth approximately £37,923 in today’s money. That’s assuming an average annual inflation rate of 2.5%. This calculation uses the present value formula, which discounts the future sum by the cumulative effect of inflation over 35 years.

Where to invest?

Pinterest (NYSE:PINS) isn’t a Buffett investment, but I’d argue that it has a margin of safety and this is highlighted by its low forward price-to-earnings-to-growth (PEG) ratio of 0.6, suggesting the stock is undervalued relative to its impressive earnings growth outlook. This metric is well below the sector average (1.46), suggesting that Pinterest’s strong projected profit expansion isn’t fully priced in.

The company continues to deliver double-digit revenue growth, record user engagement, and expanding margins, all supported by AI-driven innovation and strategic partnerships.

However, it’s not risk-free. Pinterest operates in a fiercely competitive digital advertising market, facing giants like Meta and Google. Investors are likely concerned that its peers could enhance their visual discovery or shopping features and eat away at Pinterest’s position.

I’d argue, however, that there’s no evidence of that yet, and that Pinterest’s niche might just be its greatest strength. It’s one of my favourite investments of 2025 and I believe it deserves wider consideration.

The post How investors can aim to get rich and retire early by following Warren Buffett appeared first on The Motley Fool UK.

Salesforce: the next stage of AI

Salesforce remains the dominant force in customer relationship management software. Its integration of artificial intelligence (AI) — notably through its Einstein platform and recent Informatica acquisition — positions it at the forefront of enterprise digital transformation. 

The company is expected to deliver steady earnings growth, with consensus earnings per share (EPS) projected to rise by 10.6% in 2026, 11.9% in 2027, and 14.6% in 2028, averaging just over 12% annually.

Valuation metrics show Salesforce trading at a forward price-to-earnings (P/E) of 23 times for FY26 (the current year), falling to 20.6 in FY27 and 17.9 in FY28, well below its five-year average of over 40 times. 

The forward price-to-earnings-to-growth (PEG) ratio is around 1.3. This represents a 26% discount to the information technology sector average. A good sign of value.

Salesforce’s balance sheet is strong. It has $17.4bn in cash and $12bn in debt, resulting in a net cash position that supports ongoing investment and acquisitions. 

However, investors should be mindful of the risks. Execution in AI and continued competitive pressure from Microsoft and Oracle remain ongoing challenges.

Nonetheless, analysts see plenty of potential here with the average share price target 34% higher than the current price. It’s certainly worth considering. It’s already part of my portfolio.

Pinterest: AI could be transformational

Pinterest is undergoing a transformation as AI-driven personalisation and content discovery reshape its platform. And it’s going to drive earnings growth.

Consensus estimates call for EPS to rise by 39.8% in 2025, 18.7% in 2026, and 21.2% in 2027, averaging nearly 26.6% per year. This rapid growth is reflected in its forward P/E, which drops from 19.3 in 2025 to 16.3 in 2026 and 13.4 in 2027, with the PEG ratio sitting at just 0.59.

The transformative impact of AI on Pinterest’s user experience and monetisation potential is significant, positioning the company for further re-rating as margins expand.

However, there are risks still. For one, there’s concern that the US economy may be heading towards stagflation. And that’s very important because North America represents 78% of its revenue generation. A slowing US economy, coupled with tariffs, could see an advertising budgets pullback.

Despite this, I’m investing in Pinterest for the long run and I think investors considering it should think that way too. It’s already trading at a low valuation relative to its growth expectations. Maybe a US downturn is already priced in.

The company’s lower revenue per customer outside North America also represents a huge opportunity. With 570m active users worldwide, and just one fifth of them in North America, Pinterest may be looking harder at how it can monetise this huge market.

The post 2 US stocks to consider buying in July! appeared first on The Motley Fool UK.

With £1 now worth $1.36, the pound has appreciated more than 12% from its lows in January. This is 12% that’s been wiped off the value of many of my investments. Incidentally, my portfolio peaked around mid-January. It’s not a coincidence.

Investing with a stronger pound

The pound may be marginally stronger globally, but really it’s all about the dollar getting weaker. It’s not quite the haven it used to be, and that’s why we’re also seeing gold prices surge.

The issue however, isn’t how we got here, but what happens next. Consensus forecasts suggest the pound could strengthen further against the dollar, driven by expectations of US rate cuts and relative UK economic resilience.

Morgan Stanley projects GBP/USD to reach 1.40 by the end of 2025 and 1.47 by late 2026, citing a likely slowdown in the US economy and a diminishing dollar yield advantage. Near-term volatility remains tied to economic data releases and central bank policy signals.

All of this means that investors should remember that currency fluctuations can undermine our investments. And if the pounds really does continue to rally against the dollar, then that means we need to be even more considered about our US investments.

I’ll also add that I’m worried the US stock market is getting a little hot right now. Major indices aren’t far off their highs despite effective tariffs rates increasing eight fold.

My recent purchase

I recently bought shares in Pinterest (NYSE:PINS) because its valuation and growth profile appealed to me in an increasingly hot market. The company trades at a forward price-to-earnings (P/E) of 18.8 and boasts a price-to-earnings-to-growth (PEG) ratio of 0.58.

Collectively, these two figures tell us that the stock’s well priced in the near term — trading at a 15% discount to the information technology sector average — and the PEG ratio’s significantly below what we’d normally consider good value. Consensus estimates shows the P/E ratio falling from 18.8 in 2025 to just 8.3 by 2028, as profits accelerate.

Recent results have also been strong. Q1 2025 revenue jumped 16% to $855m, while global monthly active users climbed to a record 570m, up 10% from last year. Pinterest’s artificial intelligence-powered ad tools have driven both user engagement and advertiser performance, supporting double-digit revenue growth and improved profitability.

While Pinterest remains exposed to digital ad cycles and is heavily reliant on North America for revenue — despite most users being international — its consistent execution and innovation in AI offer a strong foundation for long-term growth.

However, the market has responded well to recent results and analysts upgrades. Momentum’s strong and the valuation remains attractive. It’s certainly one investors should consider.

The post Strong pound, weak dollar: an unmissable opportunity to buy US stocks? appeared first on The Motley Fool UK.

So, why am I a little wary? Well, I’m being more selective about US stocks because the sharp rise in tariffs this year has fundamentally changed the investment landscape. Between January and April 2025, the average effective US tariff rate soared from 2.5% to 27%. These are levels not seen in over a century. It had settled slightly at 17.8% in May, but negotiations are ongoing. Such high tariffs are likely to be raising input costs, squeezing corporate profit margins, and dampening earnings growth.

Focusing in on the metrics

I’m focusing on the metrics because, in today’s environment, growth alone isn’t enough—valuations must be justifiable. With the S&P 500’s forward price-to-earnings (P/E) ratio at 21.3 — above both 5- and 10-year averages — it’s crucial to find companies where earnings multiples make sense relative to their growth prospects. 

As always I’m prioritising growth-adjusted ratios like the P/E-to-growth (PEG) ratio, which help identify stocks offering genuine value for their expected growth, but being even more selective than usual.

So, who are they? Well, Pinterest (NYSE:PINS) stands out as fundamentally cheap by most metrics, while Alphabet (NASDAQ:GOOGL) trades at lower multiples than its peers despite similar growth trajectories. In my view, this makes both attractive, non-speculative picks in a market where speculation is increasingly risky.

A closer look at Pinterest

Pinterest currently trades at a forward P/E of 17.7 times and a PEG ratio of 0.53, reflecting strong expected earnings growth at a reasonable valuation. 

The company’s AI-powered ad tools and a growing international user base have driven double-digit revenue growth, with Q1 2025 revenue up 16% year on year and global monthly active users reaching 570m.

Despite these strengths, Pinterest remains heavily dependent on digital advertising, making it sensitive to shifts in advertiser budgets and broader economic cycles.

It’s also very geographically reliant on North America for revenues, and this represents a risk as well as an opportunity. The region represents less than one-fifth of total users but nearly 80% of sales.

However, there’s plenty to be positive about. Al really seems to be a game changer, and has contributed to the company’s improving profitability and attractive growth profile.

A closer look at Alphabet

Alphabet trades at a forward P/E of 17.3 times. That’s above the communications sector median of 13.6 but about 30% below its own five-year average, signalling a more attractive entry point relative to its history.

The PEG ratio stands at 1.16, lower than the sector’s 1.43, indicating solid expected earnings growth for its valuation. I’d also add that Alphabet is more than just a communications stock, which makes its valuation so attractive.

Recent performance has been strong. In Q1 2025, Alphabet reported 12% revenue growth to $90.2bn, with Google Cloud up 28% and operating margin expanding to 34%. 

Risks? There are always risks even with some of the largest companies in the world. One here is Alphabet potentially being forced to divest Chrome in an anti-trust trial.

However, for me, its wide economic moat and diversified growth engines underpin long-term appeal.

I’ve recently bought both these stocks.

The post Are these the best American stocks for my ISA? appeared first on The Motley Fool UK.

How Pinterest makes money

Pinterest’s business model is driven almost entirely by digital advertising. The platform serves highly targeted, performance-based ads to users. The site leverages their engagement, interests, and search behaviours.

The North America region remains the dominant geography, contributing about 78% of total sales despite accounting for less than a fifth of the user base. This highlights a significant international monetisation gap, and suggests there’s substantial runway if Pinterest can close the ARPU (Average Revenue Per User) gap outside the US.

In Q4 2024, global ARPU rose 6% year-on-year to $2.12, with North America seeing even stronger gains. This ARPU growth’s critical, as it directly reflects Pinterest’s ability to convert user engagement into revenue.

Positive developments

Recent momentum’s been driven by a series of artificial intelligence (AI)-led innovations. Pinterest’s new AI-powered advertising tools have made campaign setup and creative generation far more efficient for advertisers, reportedly cutting manual work in half and reducing cost-per-acquisition by 20%.

Improvements to the recommendation engine have also paid off, with a 30-fold expansion in the AI’s ‘context window‘ allowing for deeper understanding of user behaviour. This led to a measurable increase in outbound clicks and overall engagement. These are both key metrics for advertisers.

The financials show these efforts are working. In Q4 2024, Pinterest posted its fastest revenue growth in over a year, up nearly 18% year-on-year to $1.15bn. Pinterest’s Q1 2025 results provide further evidence that the company’s momentum isn’t just a one-off, but part of a sustained growth trajectory.

In the first quarter, it generated $855m in revenue, up 16% year-on-year, with growth accelerating to 17% on a constant currency basis. This performance was driven by continued expansion of its user base, which reached a record 570m global monthly active users — a 10% increase from the prior year. 

What’s more, the EBITDA margin increased 300 basis points to 20%.

The bottom line

A key risk for Pinterest is its reliance on digital advertising. This is sensitive to economic downturns and shifts in advertiser budgets. Additionally, intensifying competition and regulatory scrutiny around data privacy could impact user growth and monetisation efforts.

Nonetheless, I’m buoyed by the trajectory and find the valuation very attractive. The company trades at 17.7 times forward earnings and has a price-to-earnings-to-growth (PEG) ratio of 0.53. Now as much as I love the PEG ratio, I believe this is slightly skewed by a singular prediction at the end of the forecasting period. Discounting that one prediction, the stock still looks very cheap to me.

I recently bought Pinterest shares and may buy more.

The post £10,000 invested in Pinterest shares 1 month ago is now worth… appeared first on The Motley Fool UK.