We recently published a list of 10 Stocks with Potential to Explode in 2025. In this article, we are going to take a look at where MongoDB, Inc. (NASDAQ:MDB) stands against other stocks with potential to explode in 2025.
The recent pullback in US equities can be a sign of an aging bull market and a reaction to developments happening around trade policy, as per Jurrien Timmer, Director of Global Macro for Fidelity Management & Research Company. Corrections and volatility are the factors investors need to consider to capture any sort of long-term market returns. The current volatility has got many investors worried regarding the prospects of losing their gains.
Pullbacks Are Part and Parcel
As of March 11, the S&P 500 Index declined 9.3% from its all-time closing high it touched in mid-February, says Timmer. According to him, the market has seen a decline of 5% or more in 93% of calendar years since the year 1980, and it has suffered a 10% or more drop in 47% over the same calendar years. Yet, its average calendar-year return over a similar period has been ~13.3%. This means that pullbacks are quite common in the equity markets. The broader market has seen recovery from every one of those periods and has delivered healthy long-term returns.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Expert’s Views on Current Market Dynamics
Timmer opines that bull markets generally take place when there are expectations that the news can’t get any worse. The markets are forward-looking, meaning that stocks always showcase the expectations regarding the future. Even if the current news is not favorable, if investors think that tomorrow’s news will be less bad, the prices might start to increase. In this stage, the market continues to increase despite a decline in profits or earnings. This reflects that the higher P/E ratios have been fueling the market. After 2 – 4 quarters, the profits start to show up. Now, as the bull market matures, earnings growth tends to take charge, with the PE ratios beginning to decline.
As per Timmer, the market investors are in this environment. The earnings growth remains in the double digits, but since investors are getting into the later innings of the bull market, the P/E ratios have now been stretched. The broader market is slightly more prone to fluctuations or volatility. Apart from these trends, the market continues to process the impact of current trade policy shifts. Overall, Timmer said that across all different cycles, booms, crises, and busts, the markets eventually recovered and touched new all-time highs.
Our Methodology
To list the 10 Stocks with Potential to Explode in 2025, we sifted through several online rankings to shortlist the stocks that analysts see significant upside to, as of March 18. Next, we mentioned hedge fund sentiment around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A software engineer hosting a remote video training session on a multi-cloud database-as-a-service solution.
MongoDB, Inc. (NASDAQ:MDB)
Average Upside Potential: ~108.1%
Number of Hedge Fund Holders: 70
MongoDB, Inc. (NASDAQ:MDB) is a software company that is engaged in developing and providing MongoDB, a popular NoSQL database that has been designed for flexibility, scalability, and performance. Citi has maintained a “Buy” rating on the company’s shares with a price target of $430. As per the firm, it posted healthy quarterly results, showcasing improvements in Atlas consumption, despite the quarter being overshadowed by a more conservative fiscal 2026 guidance. MongoDB, Inc. (NASDAQ:MDB) delivered a healthy end to fiscal 2025, with 24% Atlas revenue growth and significant margin expansion. In fiscal year 2026, the company expects to see stable consumption growth in Atlas, its main growth driver.
MongoDB, Inc. (NASDAQ:MDB) has acquired Voyage AI, which is a pioneer in state-of-the-art embedding and reranking models powering next-gen AI applications. The integration of Voyage AI’s technology with the company is expected to enable organizations to easily build trustworthy, AI-powered applications by providing highly accurate and relevant information retrieval deeply integrated with operational data. MongoDB, Inc. (NASDAQ:MDB) highlighted that Voyage AI’s advanced embedding and reranking models allow applications to extract meaning from highly specialized as well as domain-specific text and unstructured data—spanning across legal and financial documents to images, code, and enterprise knowledge bases.
Montaka Global Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“While the bulk of MongoDB, Inc.’s (NASDAQ:MDB) portfolio exposures continued to remain relatively stable over the December quarter, we did undertake some modest hands-on portfolio management in the tail-end of the portfolio.
We exited three of Montaka’s smallest portfolio names. While we see long-term upside in all of these names, we see more upside elsewhere. Hence, we reallocated these proceeds to (i) scale up Montaka’s investment in Alphabet on increased probabilities that its advantages in Google Search are strengthening (not to mention the group’s numerous growth options increasing in probability – from YouTube, to Waymo, and even quantum computing); and (ii) to establish an initial ‘outlier’ position in database software provider, MongoDB (MDB).
We view outliers as ‘option-like’ in that their upside potential is very large, but the probability is far less certain. On this basis, we deliberately restrict Montaka’s aggregate portfolio allocation to outliers – which currently stands at less than 7%. The remaining 93% of Montaka’s portfolio is allocated to businesses we classify as ‘compounders’.
As a database provider for large production-ready applications, MDB has suffered of late because software developers have overwhelmingly focused on small, experimental AI-based ‘proof of concepts’ rather than production deployments. We expect this cycle to turn in 2025 and beyond, and it’s possible (though not certain) that demand for MDB accelerates materially…” (Click here to read the full text)
Overall, MDB ranks 3rd on our list of stocks with potential to explode in 2025. While we acknowledge the potential of MDB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MDB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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