Pinterest (PINS) is seeing weaker-than-expected revenue trends amid macro pressures and limited advertiser diversity, with large US retailers moderating ad spend particularly in the home furnishings category due to tariffs, Morgan Stanley said in a Wednesday note.

Although the Wall Street firm lowered its 2025 revenue forecast by 1% and trimmed its 2026-2027 adjusted earnings before interest, taxes, depreciation, and amortization forecast by 2%-3%, it highlighted three catalysts that it believes could strengthen growth into 2026.

Pinterest is showing stronger platform activity, reporting 80 billion monthly queries and a 40% increase in outbound clicks in Q3, and is now testing AI-powered bidding systems designed to better align ads with actual conversions, according to the report.

Meanwhile, Performance+ continues to gain momentum, delivering a 24% higher conversion lift for retailers and prompting small and medium-sized advertisers to increase spending at a 12% faster rate than non-users.

The analysts also noted that a slate of upcoming consumer and advertiser tools -- including the Pinterest Assistant, enhanced personalized Boards, and new ad formats -- could contribute incremental revenue as they scale.

The firm maintained its overweight rating on the stock but cut its price target to $32 from $41.

Shares of Pinterest were up 0.9% in recent trading.

Price: 25.76, Change: +0.24, Percent Change: +0.96