MongoDB (MDB Quick QuoteMDB - Free Report) shares have plunged 28.7% year to date, underperforming the Zacks Computer and Technology sector’s growth of 13.6%, raising questions about whether this presents a buying opportunity for investors. This significant decline comes amid broader market volatility and shifting sentiment toward growth-oriented technology stocks.

MongoDB, known for its popular NoSQL database platform, has been a darling of the tech industry since its IPO in 2017. The company's innovative approach to data management has attracted a wide range of customers, from startups to Fortune 500 companies. 

Although the slump presents a potential entry point for investors who believe in the company's long-term prospects, the combination of strong financial performance, market leadership in NoSQL databases and favorable industry trends make a compelling case for considering MongoDB stock at its current levels.

Atlas Drives MDB's AI and Cloud Database Dominance

MongoDB's cloud-based Atlas platform has emerged as the driving force behind the company's growth strategy, demonstrating remarkable resilience in challenging economic conditions. In the second quarter of fiscal 2025, Atlas cloud database service revenues jumped 37% year over year, accounting for 71% of MongoDB's total revenues. This impressive growth underscores the increasing shift toward cloud-based database solutions and Atlas' dominant position in MDB's portfolio.

The platform's success is evident in its growing adoption among enterprise clients, exemplified by its partnership with Bendigo and Adelaide Bank for core banking technology modernization. Product innovation remains crucial to Atlas' continued success, with the introduction of MongoDB Atlas Vector Search addressing the rising demand for AI-powered database solutions. This feature, which simplifies the integration of generative AI and semantic search capabilities, is expected to enhance customer satisfaction, engagement and retention rates.

Strategic partnerships with major cloud providers have played a pivotal role in Atlas' expansion. MongoDB has extended Atlas' global reach to 118 cloud regions across key providers, including Alphabet (GOOGL Quick QuoteGOOGL - Free Report) -owned Google Cloud, Amazon (AMZN Quick QuoteAMZN - Free Report) -owned Amazon Web Services (“AWS”) and Microsoft (MSFT Quick QuoteMSFT - Free Report) Azure. This broad availability caters to diverse customer requirements for data residency, availability and low latency.

The company's commitment to AI innovation is further demonstrated by the general availability of the MongoDB AI Applications Program (MAAP). This initiative brings together an ecosystem of tech leaders and AI innovators to offer an end-to-end AI technology stack, facilitating rapid development and deployment of AI applications for organizations eager to adopt this technology.

MongoDB's strong market position is reinforced by recent accolades, including being named AWS' Technology Partner of the Year in Taiwan and Global Software Partner of the Year in ASEAN. The company's Atlas for Government platform now supports Google Cloud's Assured Workloads, making it the first fully managed multi-cloud data platform authorized at FedRAMP Moderate.

As businesses continue their digital transformation journeys, MongoDB's developer-friendly approach and ability to handle diverse data types position it well to meet evolving needs, potentially driving long-term growth in the NoSQL database market.

MDB’s Fiscal 2025 Outlook

MongoDB expects total revenues between $1.92 billion and $1.93 billion for fiscal 2025. The Zacks Consensus Estimate for revenues is pegged at $1.92 billion, indicating year-over-year growth of 14.28%. 

Non-GAAP earnings per share are expected in the range of $2.33-$2.47. The consensus mark for fiscal 2025 earnings is pegged at $2.40 per share, up 6.2% in the past 30 days. The figure indicates a 27.9% year-over-year decline. We believe that increasing competition in the database market from both established players and startups raises questions about MongoDB's premium valuation amid potential margin pressure. 

MongoDB is trading at a premium with a forward 12-month P/S of 10.18X compared with the Zacks Internet - Software industry’s 2.47X, reflecting a stretched valuation.

Here’s What Investors Should Do With MDB Stock

While the recent stock performance has been disappointing, the current price could represent a discount on a high-quality tech stock with significant growth potential, making the stock worth buying in the near term. The company's ability to maintain its growth trajectory in the face of competition will be crucial for its long-term success.

MongoDB’s multi-cloud approach offers customers flexibility in choosing public cloud providers, ensuring a consistent experience across platforms. This strategy aligns with the broader shift toward cloud computing and data-driven decision-making, creating a favorable long-term outlook for MongoDB. MDB currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.