We recently published a list of the 12 Best AI Stocks Leading the ‘Big Tech Race’ to $4 Trillion According to a Famous Wall Street Analyst. Since MongoDB Inc (NASDAQ:MDB) ranks 11th on the list, it deserves a deeper look.
Wedbush Securities analyst Dan Ives has said in a fresh note that major tech giants are now running in a “race” to capture the $4 trillion AI market, calling GPUs the new “oil” or “gold” in the technology sector. Ives said that the AI “party” is just getting started and the clock is showing “9p.m. in a party going till 4 a.m. with the rest of the tech world now joining.” Ives thinks spending on GPUs and data centers is the “only game in town.” Ives thinks the “first wave” of AI benefited major technology giants leading the AI race, with the second, third and fourth “derivatives” beginning to show trickle-down effects on other companies.
In a separate investing event, Ives recently predicted that the AI-led bull run can last for another two to three years, saying in a year from now investors will be looking at $3 trillion to $4 trillion market caps for major tech companies.
“The tech bull market is just starting,” Ives reportedly said.
In his latest note Ives highlighted several stocks which he believes can benefit from the AI revolution. In this article we take a detailed look at these stocks and discuss their AI-related growth catalysts and see whether or not they are sound long-term investments. With each stock we have mentioned 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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MongoDB Inc (NASDAQ:MDB)
Number of Hedge Fund Investors: 56
MongoDB Inc (NASDAQ:MDB) is one of the stocks that will benefit from the “AI party” where the clock is still at “9PM” while the party is scheduled to go on until “4AM,” according to Dan Ives. Ives thinks MongoDB Inc (NASDAQ:MDB) is one of the stocks that can profit from the AI revolution because of their “massive installed bases” in both the enterprise and consumer spaces.
MongoDB Inc (NASDAQ:MDB) shares plunged last month after the company posted Q1 results and gave a disappointing Q2 and full-year fiscal 2025 outlook. During the second quarter MongoDB Inc (NASDAQ:MDB) expects revenue in the range of $460.0 million to $464.0 million vs. consensus of $471.54 million.
During full fiscal 2025, MongoDB Inc (NASDAQ:MDB) expects revenue in the range of $1.88 billion to $1.90 billion vs. consensus of $1.94 billion. Adjusted net income per share in the quarter is expected in the range of $2.15 to $2.30 vs. consensus of $2.43.
Despite the weak results, Wall Street continues to believe in the AI story of MongoDB Inc (NASDAQ:MDB). Stifel analysts Brad Reback and Robert Galvin said in a note that MongoDB Inc (NASDAQ:MDB) faced headwinds amid a broader slowdown in the industry that caused a decline in consumption and workloads. The analysts said they continue to believe in the “set of core and emerging AI growth drivers” which can enable MongoDB Inc (NASDAQ:MDB) to sustain a 20%+ revenue growth and strong cash flows in the near future.
Canaccord Genuity David Hynes, who maintained a Buy rating on the stock but slashed his price target to $425 from $435, said that MongoDB Inc (NASDAQ:MDB) is helping customers build AI-enabled applications. He thinks MongoDB should be bought on the dip, calling the stock a “generational asset.”
“When you can get a pullback of this size on a generational asset, you take it,” Hynes added.
Average analyst price target set by Wall Street on MongoDB Inc (NASDAQ:MDB) is $329.58, which presents a whopping 45% upside potential from the current levels. In the next year (fiscal 2026), MongoDB’s earnings are expected to grow 34% while revenue growth is expected to come in at 17%, based on data from Yahoo Finance. Based on these growth catalysts, MongoDB Inc (NASDAQ:MDB) bulls believe the stock’s high forward P/E multiple of over 100 is justified.
Alger Mid Cap Growth Fund stated the following regarding MongoDB, Inc. (NASDAQ:MDB) in its first quarter 2024 investor letter:
“MongoDB, Inc. (NASDAQ:MDB) is a scalable open-source database platform that allows developers to store, manage, and process structured. semi-structured and unstructured data generated by or feeding into the applications. Atlas, their cloud database-as-a-service platform, supports a comprehensive suite of core workloads, covering database, search, analytics and charts, and device sync. We believe the company is benefiting from a secular increase in demand for high-volume data storage driven by organizations needing to be able to store large amounts of data while still performing rapidly. During the quarter, the company reported strong fiscal fourth quarter results where revenues and operating profits beat analyst estimates, driven by strong growth in Atlas. However, shares fell after management issued forward revenue guidance that was below consensus estimates due to one-time items related to unused credits and multi-year upfront enterprise agreements. Nevertheless, we continue to believe the company is well positioned to become a best-in-class database management platform given its exposure to the secular increase in demand for high volume data storage solutions.”
Overall, MongoDB Inc (NASDAQ:MDB) ranks 11th on Insider Monkey’s list titled 12 Best AI Stocks Leading the ‘Big Tech Race’ to $4 Trillion According to a Famous Wall Street Analyst. While we acknowledge the potential of MongoDB Inc (NASDAQ:MDB), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MongoDB Inc (NASDAQ: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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