- Flexible platform suited to large data volumes
- Firm has a record of smashing forecasts
- Shares well below 2021 level, analysts target $500
Analysts at Well Fargo have called MongoDB (MDB:NASDAQ) one of the ‘best ways to play AI’ in a note to clients, flagging its scope to be a major player in new artificial intelligence developments.
‘We see MongoDB as the best AI play in software infrastructure given its ever-expanding list of new workloads,’ explained the analysts.
‘We believe AI applications are another new workload that can drive the growth of MongoDB. We believe AI workloads are more impactful to growth than other workloads, and MongoDB is the best-positioned vendor, in our view, to capture these workloads.’
WHAT MONGODB DOES
MongoDB operates a scaleable and flexible document database that can handle both structured (spreadsheet, for example) and unstructured data sets (text documents, say). It is hugely popular with software developers because it is simple to learn and use, while still providing all the powerful capabilities needed to meet the most complex requirements at any scale. It has also become a hit with corporate buying departments, allowing companies to seamlessly tailor the software to their own multi-cloud computing environments.
‘We provide drivers for 10+ languages (software coding languages), and the community has built dozens more’, says the company.
It is a point not missed by Wells Fargo. Its’ analysts believe the key to long-term growth is MongoDB’s ability to win new workloads, as ‘every incremental workload has an exponential impact on ARR (annual recurring revenue)’.
Running AI programmes requires huge amounts of data from which AI can analyse and learn. Take self-driving cars, for example. Not only do they require enormous computing power to assess a multitude of geolocation data points, but they also have to constantly assess large numbers of mobile factors – other vehicles, people, animals, say, and their speed and direction and how that could affect the car.
TARGETING LARGER CUSTOMERS
Wells Fargo believes large customers have an outsized impact on revenue growth, adding that ‘MongoDB is still massively underpenetrated in the G2000’, or in other words, the world’s largest 2,000 organisation. Wells Fargo also believes MongoDB has ‘significant room for operating margin expansion.’
Since listing on Nasdaq in 2017, MongoDB has consistently smashed growth expectations, firing the stock to 1,168% gains. In its last quarter (to 31 Jul), the $27.8 billion company reported revenues of $423.8 million versus $393.68 million forecast.
This year, the stock has more than doubled to $389.07, although that remains far below record $570 levels of June 2021. Wells Fargo analysts have slapped a $500 target on the stock.