MongoDB, Inc. (MDB): A Bull Case Theory

We came across a bullish thesis on MongoDB, Inc. on Nikhs’s Substack. In this article, we will summarize the bulls’ thesis on MDB. MongoDB, Inc.'s share was trading at $314.44 as of October 10th. MDB’s forward P/E was 76.92 according to Yahoo Finance.

MongoDB has built its success by liberating developers from rigid relational schemas, becoming the default choice for modern web applications. Its document-based model eliminated migration headaches, accelerated development, and powered a multi-billion-dollar business. However, the next frontier isn’t storage, it’s machine memory. AI applications demand hybrid retrieval, combining vector similarity search, structured filters, and real-time operational data under strict governance.

MongoDB’s strategic bet is integration: unifying operational and retrieval capabilities within Atlas, its managed cloud platform, rather than relying on stitched-together specialist databases or incumbent defaults. This approach prioritizes governance, operational consistency, and simplicity, addressing the real-world needs of enterprises deploying AI at scale.

Financially, MongoDB faces pressure as high-margin self-managed licenses decline, while Atlas, which resells cloud infrastructure, carries lower gross margins. Vector search workloads are compute-intensive, raising costs without guaranteed pricing power. Management is mitigating this via prepayments, IPv4 purchases, and architectural optimizations, but execution risk remains.

The company’s upside hinges on AI feature adoption—if Atlas Search, Vector Search, and stream processing attach to 30%+ of deals, MongoDB could expand margins and accelerate growth, potentially re-bundling the AI data layer and commanding software-like economics. Conversely, if simpler or specialized solutions dominate, margins may compress, and the company risks commoditization.

The investment case is thus binary: successful integration and AI adoption could drive 30%+ upside, while failure could produce 15-30% downside. Key markers to watch include AI attach rates, gross margin trajectory, hybrid retrieval performance, and evidence of enterprise consolidation away from multi-tool stacks. MongoDB stands at an inflection point, aiming to transform from the database that freed developers to the platform that ensures machines remember what matters, capturing the next wave of AI-driven enterprise software.

Previously we covered a bullish thesis on MongoDB, Inc. (MDB) by TechFundies in March 2025, which highlighted Atlas driving recurring revenue growth, margin pressures, and upside from conservative guidance. The stock has appreciated approximately 60% since our coverage as Atlas adoption continued. The thesis still stands with new AI opportunities. Nikhs shares a similar view but emphasizes machine memory, hybrid retrieval, and AI attach as the key upside catalyst.

MongoDB, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held MDB at the end of the second quarter which was 72 in the previous quarter. While we acknowledge the potential of MDB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.