Pinterest's shares rose 20% on Friday as it forecast first-quarter revenue above estimates, indicating that its AI-powered tools would spur ad spend on the image sharing platform.

Advertisers turn to Pinterest for its AI-driven ad tools such as Performance+ suite, designed to help advertisers better target users with automation features. "Our strategy is paying off. People are coming to Pinterest more often, the platform has never been more actionable," CEO Bill Ready said in a statement.

Pinterest Inc. posted strong holiday-quarter revenue and gave an upbeat forecast for sales in the current period, a sign that its advertising business continues to grow despite increased competition from much larger rivals in the social networking space.