MongoDB Stock Added To Analyst 'Best Ideas List' With 'AI Strategy Accelerating'

MongoDB stock rallied Monday, adding to recent gains after analysts at Wedbush Securities added the company to its "Best Ideas List" of favorite stocks. While the AI-driven growth prospects of Oracle (ORCL) are the talk of Wall Street, its smaller database competitor MongoDB (MDB) has been rallying in recent weeks as well.

MongoDB shares have rallied more than 60% since the company reported fiscal second-quarter results late last month. The company provides document-based database software, competing in a market dominated by Oracle that also includes offerings from cloud giants like Amazon (AMZN) and Microsoft (MSFT).

"MongoDB is now starting to hit its next stride as the AI use cases expand significantly over the coming years," Wedbush analyst Dan Ives wrote to clients Monday. "Following the company's successful bounce-back quarter that saw Atlas consumption metrics re-accelerating, we believe the MongoDB growth story has started to re-gain momentum across (Wall) Street with greater consumption metrics from its expanding customer base."

Atlas is a subscription database software offering designed to work across cloud platforms. For MongoDB's July-ended quarter, the company said in late August that subscription-based revenue rose 23% to $572 million, compared with analyst estimates of $532 million.

In a separate client note, Ives upped his price target for MongoDB stock to 400 from 300 and reiterated an outperform call. He said the company's "AI strategy (is) accelerating."

Recent studies finding enterprises struggling to implement AI to their operations could benefit MongoDB, in Ives' view.

"MongoDB has started to gain significant ground as more customers have hit a wall with updating their databases and infrastructure to prepare for improving platforms with AI integrations," Ives wrote to clients.

MongoDB Stock: Analyst Day Wednesday

Meanwhile, MongoDB will host an analyst presentation on Wednesday as part of its annual customer conference.

On the stock market today, MongoDB stock rose more than 3% to 341.02 in recent trading.

MongoDB stock is ahead 45% year-to-date and up about 17% from 12 months ago. Optimism about the company's ability to harness AI excitement for growth powered a 200%-plus rally for MongoDB stock from late November 2022 to February 2024. But a string of earnings letdowns and concerns about AI's impact on software firms weighed on MongoDB shares for much of 2024 and the first half of this year.

Shares remain sharply below MongoDB's February 2024 high of 509.62. The stock's all-time high is 590, reached in November 2021.

But MongoDB's Relative Strength Rating has climbed to 91 out of a best-possible 99, compared with a score of 26 three months ago. The RS line measures a stock's price performance vs. the S&P 500, highlighting MongoDB's outperformance.

MongoDB stock has an IBD Composite Rating of 98 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.