After watching growth names get brutalized for the last two months as bond yields have raged higher, we're watching closely at the last week and a half as the stock market surges on the hope that the interest rate increase cycle is finally over.
If it is over, the next questions will be:
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When will rates decrease?
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How hard of a landing should we expect?
Until we get more clarity on both of these questions, investors seem to be anticipating the bullish end of the spectrum. Therefore, when you combine this macro backdrop with the fact that DataDog reported huge earnings this morning, investors are quickly jumping back on the AI train.
Therefore, with tech players deep in the development of their AI models, we're taking a look at another data play that we've covered before. And now that this stock has hit it's price target, we're taking a deeper look under the hood to see if we're continuing our long play on them.
Looking closer at this AI niche specifically, we believe it's more important than ever to have data that's structured efficiently for these models to work properly. And one huge early winner of this move to make data more coherent has been one of our longest-held stocks: MongoDB ($MDB).
Technically, Mongo blew past our price target within two months of our latest coverage, but then the stock went parabolic thanks to two new product launches that came out of their investor day in June.
But since then, the market tempered its expectations for Mongo. And now the stock has finally settled at a level we feel comfortable moving forward from.
Our thesis remains unchanged from our first price target, but now MongoDB has an even more versatile toolkit for making data work better for organizations -- especially for AI training applications.
For us, the best part is that MongoDB is getting paid regardless of what actually becomes effective in the AI space, as MongoDB's data architecture products are critical for both the training and deployment of LLMs.
So, let's update our price target (more on this below) and take a look at the driving forces behind the first big software winner from our AI portfolio. We'll try to keep this from getting too jargon-heavy. 👇