Shares of MongoDB MDB have declined 11.1% year to date (YTD), underperforming the broader Zacks Computer and Technology sector and the Zacks Internet Software industry, which have gained 22.5% and 11%, respectively.
MDB has also lagged competitors Datadog DDOG, Snowflake SNOW and Nutanix NTNX. During the same timeframe, Datadog, Snowflake and Nutanix have gained 108.3%, 63.1% and 41%, respectively. These competitors are strengthening their positions in the cloud infrastructure, enterprise data management and AI-driven software markets, with Datadog, Snowflake and Nutanix benefiting from growing demand for their respective offerings.
MongoDB's weak stock performance reflects investor concerns regarding its premium valuation, consumption-driven revenue model and intensifying competition. Despite accelerating revenue growth, uncertainty surrounding the pace of AI monetization and the sustainability of enterprise spending continues to weigh on investor sentiment.
However, we believe the decline presents an attractive buying opportunity, supported by robust Atlas adoption, strengthening Enterprise Advanced demand, expanding AI capabilities and improving profitability. Upward earnings estimate revisions and an improving growth outlook further reinforce MongoDB's long-term investment appeal. Let's discuss in detail.
MDB Stock’s Price Performance
Image Source: Zacks Investment Research
MongoDB Benefits From Strong Atlas Growth
MongoDB's Atlas cloud database platform remains its primary growth driver, benefiting from accelerating cloud adoption, enterprise modernization and increasing demand for scalable data infrastructure.
In the second quarter of fiscal 2027, Atlas revenues increased approximately 29% year over year for the fifth consecutive quarter. The platform generated a record $127 million in year-over-year incremental revenues, reflecting strong consumption trends among large enterprise customers, particularly in North America.
MongoDB's expanding customer base underscores its growth momentum. The company ended the quarter with 70,600 customers, adding a record 2,900 net new customers sequentially. Atlas customers reached 69,300, up from 58,500 in the year-ago quarter.
The company's net annual recurring revenue (ARR) expansion rate improved to 122% from 119% a year earlier. Moreover, customers generating at least $100,000 in ARR increased 17% year over year to nearly 3,000, highlighting strengthening enterprise adoption.
Management expects Atlas revenues to grow approximately 27% in fiscal 2027, up 300 basis points from its previous outlook. Sustained enterprise demand, increasing multiproduct adoption and expanding workloads are expected to support growth.
AI Innovation Expands MongoDB's Growth Opportunities
MongoDB is benefiting from growing demand for AI-powered applications that require real-time operational data, flexible database architectures and advanced retrieval capabilities.
Its integrated platform combines operational databases, Atlas Search, Vector Search, Voyage AI embedding models and reranking capabilities, enabling enterprises to develop AI applications without relying on multiple disconnected systems.
The company recently introduced Automated Voyage Embeddings, the Atlas Embedding and Reranking API, voyage-code-4 and Vector Search in Atlas Stream Processing. These innovations simplify AI application development while improving retrieval accuracy and efficiency.
MongoDB also launched its fully managed Atlas Model Context Protocol (MCP) Server, connecting AI coding agents such as Claude Code, Codex, Grok Build and Devin directly to Atlas data.
AI adoption is gaining traction among customers. Voyage customer count nearly doubled sequentially for the second consecutive quarter, while Atlas Vector Search adoption continued to outpace overall company growth. The company indicates that approximately 30% of Atlas ARR comes from customers with at least one AI use case, demonstrating growing AI exposure, although this does not represent AI-specific revenue.
MongoDB's expanding relationships with AI-native companies, including ElevenLabs and Fireflies, further strengthen its positioning. As enterprises increasingly deploy AI agents and intelligent applications, demand for scalable operational databases is likely to accelerate.
Enterprise Advanced Strengthens MDB's Prospects
MongoDB's Enterprise Advanced (EA) business provides another growth opportunity through its ability to support self-managed, private-cloud and hybrid deployments.
EA and other revenues surged approximately 36% year over year in the second quarter of fiscal 2027, driven by broad-based enterprise demand across financial services, technology and the public sector.
The introduction of Search and Vector Search capabilities in Enterprise Advanced strengthens MongoDB's competitive positioning among regulated organizations seeking to deploy AI applications without transferring sensitive data to public clouds.
Management raised its fiscal 2027 EA and other revenue growth outlook to approximately 11% from the earlier mid-single-digit expectation. The company's run-anywhere strategy, which allows customers to deploy applications across cloud and on-premises environments, should support sustained enterprise adoption.
MDB's Earnings Estimates Show Upward Momentum
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $6.50 per share, increasing from $6.06 over the past 60 days and implying 30.78% year-over-year growth.
The consensus estimate for fiscal 2028 earnings stands at $7.75 per share, rising from $7.26 over the past 60 days and indicating 19.36% annual growth.
For the third quarter of fiscal 2027, the consensus estimate for earnings stands at $1.60 per share, implying 21.21% growth from the year-ago quarter. These positive revisions reflect strengthening expectations regarding MongoDB's earnings potential.
Image Source: Zacks Investment Research
Valuation: MDB Shares Trade at a Premium
MongoDB’s shares remain expensive relative to the industry, as suggested by its Value Score of F. In terms of forward 12-month price-to-sales (P/S), MDB trades at 8.81X, significantly higher than the industry's 4.49X.
However, this premium is supported by MongoDB's strong Atlas growth, expanding AI capabilities, increasing enterprise adoption and improving profitability.
MDB Stock’s Valuation
Image Source: Zacks Investment Research
Conclusion
Despite its year-to-date underperformance and premium valuation, MongoDB's accelerating cloud database adoption, expanding AI opportunities, resilient Enterprise Advanced business and improving profitability strengthen its long-term growth prospects.
Positive earnings estimate revisions and robust enterprise demand further support the investment case. Although competitive pressures and consumption-related uncertainty remain concerns, the company's strong fundamentals suggest that the recent share-price weakness offers an opportunity for long-term investors to accumulate MDB shares.
MongoDB currently sports a Zacks Rank #1 (Strong Buy) along with a Growth Score of A — a combination that underscores its solid growth prospects and attractive investment opportunity, per the Zacks methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MongoDB, Inc. (MDB): Free Stock Analysis Report
Snowflake Inc. (SNOW): Free Stock Analysis Report
Nutanix (NTNX): Free Stock Analysis Report
Datadog, Inc. (DDOG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).