We're continuing to add to our AI portfolio by renewing coverage on one of our favorite growth companies from 2020: MongoDB ($MDB). MongoDB is a classic software company with a huge value prop that's basically incomprehensible outside of the tech space.
Like a lot of genuinely valuable growth plays, MongoDB has spent the last two years getting brutalized by higher interest rates and a market that wants little to do with growth plays.
And despite being down over 50% since their peak during the 2021 mania, MongoDB has managed to grow revenue and diversify enough to now be worth a second look.
When deciding to get back into covering MongoDB, we only have one real question:
Will this stock be able to survive declining cloud budgets while companies rework their priorities as we potentially enter a recession?
And the main answer to that question is simple: MongoDB's service can mildly benefit from reduced cloud budgets, as their platform helps teams optimize their databases and save on cloud costs.
Not only that, but the market is shifting towards full-service models like MongoDB's Atlas product, which is their highest margin revenue line.
But more importantly, MongoDB's database architecture is directly compatible with the tools being used to train and implement AI systems. So as the tech industry shifts to AI in a big way, MongoDB can capture a lot of upside as model trainers organize their data using MongoDB systems.
And once again, we're turning to this as a foundational strategy in our AI portfolio because we're looking for service providers who will get paid no matter what, even if none of these AI plays actually have a profitable client-facing solution.
We're still deep in the development phase here in the AI revolution, so let's find as much upside as we can before we really start picking winners.
Let's dive through the details while (hopefully) not letting the strategy get too dry. 👇