Is MongoDB Inc (NASDAQ:MDB) the Best AI Stock for Long-Term Investors?
We recently published a list of 10 Best AI Stocks for the Second Half of 2024. Since MongoDB Inc (NASDAQ:MDB) ranks 8th on the list, it deserves a deeper look.
Wedbush Securities in a fresh note said mega-cap tech stocks have a 15% upside in the second half of 2024, driven by AI. Wedbush analyst Dan Ives, who has been beating the AI drum and thinks the AI “party” is just getting started, wrote that the $4 trillion AI arms race is between major tech players and GPU chips have become the new oil or gold in the tech industry.
Ives wrote that he thinks NASDAQ will have another strong second half of the year.
“Tech stocks will be up 15% the rest of 2024 in our view with tech fundamentals set to accelerate as AI use cases materially expand.”
While Ives continues to see the major tech stocks leading the AI market, he thinks the AI-led rally can broaden out to tech companies who have strong “installed” bases which can actually use generative AI applications and models.
Last month, while talking to CNBC, Ives said that the tech bull market is going to last for at least two more years. When asked what could be the threat to this bull run, Ives said that China could be a threat amid a possibility of “tech cold war” but he thinks that is a “contained threat.”
“It started off with the semis, but now it’s started to happen is, the demand and the use cases” are expanding to other companies. Ives called the AI boom the “fourth industrial revolution.”
We picked top AI stocks from Wedbush’s latest note. The firm named some of these stocks as the best picks for the second half of 2024 while called others “oversold” tech stocks. With each stock we have mentioned the number of hedge fund investors. 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
Wedbush analyst Dan Ives recently said that several AI stocks including Mongodb are “way oversold.”
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.
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. 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.
ClearBridge All Cap Growth Strategy stated the following regarding MongoDB, Inc. (NASDAQ:MDB) in its first quarter 2024 investor letter:
“During the first quarter, we initiated a new position in MongoDB, Inc. (NASDAQ:MDB), in the IT sector. The company offers a leading modern database platform that handles all data types and is geared toward modern Internet applications, which constitute the bulk of new workloads. Database is one of the largest and fastest-growing software segments, and we believe it is early innings in the company’s ability to penetrate this market. MongoDB is actively expanding its potential market by adding ancillary capabilities like vector search for AI applications, streaming and real-time data analytics. The company reached non-GAAP profitability in 2022, and we see significant room for improved margins as revenue scales.”
Overall, MongoDB Inc (NASDAQ:MDB) ranks 8th on Insider Monkey’s list titled 10 Best AI Stocks for the Second Half of 2024. 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 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.