We came across a bullish thesis on MongoDB, Inc. (NASDAQ:MDB) on Substack by Antonio Linares. In this article, we will summarize the bulls' thesis on MDB. MongoDB, Inc. (NASDAQ:MDB)'s share was trading at $245.63 as of Dec 20. MDB's forward P/E was 71.94 according to Yahoo Finance.
A database administrator managing a large database, ensuring the client's data is secure.
MongoDB's database architecture offers a distinct advantage for AI applications, positioning the company for significant growth as AI technology expands. Mongo's flexible schema outperforms traditional SQL databases, which struggle with the complex, dynamic data structures required by AI applications. While SQL databases excel in web 2.0 apps, they cannot handle the varied data types used in AI, such as source data, vector data, and metadata, alongside real-time operational data. MongoDB's ability to efficiently store and process this data, coupled with its low-latency performance, makes it an ideal solution for AI developers, especially as AI applications grow in popularity. Despite current dominance of SQL databases, MongoDB is increasingly popular among developers, outpacing competitors like Oracle and Amazon's DynamoDB, as seen in the company's 29-fold revenue growth since FY2016.
However, while MongoDB is well-positioned for AI, the widespread adoption of AI applications is still in the early stages, with companies focusing more on AI infrastructure rather than fully developed applications. MongoDB's CEO, Dev Ittycheria, pointed out that AI has yet to become a significant revenue driver for Mongo in FY2025, although the company has seen growth in a few AI-related workloads. The company's low market share remains a concern, but its solid distribution model, which emphasizes a community-driven approach, continues to drive financial performance. Mongo's focus on developing its schema and leveraging developer relationships has made it a major player in the database sector, and the rise of generative AI is likely to accelerate its growth. This technology will make the process of migrating to MongoDB's database more efficient, thus reducing the cost and time required for companies to modernize their legacy systems.
Mongo's efforts to modernize legacy applications using generative AI have shown impressive results, with pilots reducing migration costs by 50%. As generative AI continues to evolve, Mongo expects to see exponential growth, particularly in its enterprise channel. The company is seeing a growing interest in its database services, and as generative AI technology streamlines the migration process, Mongo's revenue potential should increase significantly. Over the next few years, Mongo's AI-related products are likely to become more standardized, further expanding the company's market reach. Mongo's customers are also pursuing proprietary data as a competitive advantage, which plays into Mongo's long-term strategy. As AI applications become more data-driven, Mongo's ability to store and manage proprietary data will be a key differentiator, positioning the company for continued success in the AI-driven future.