MongoDB Stock (MDB) Shows Why It Deserves a Higher Multiple

Cloud database company MongoDB (MDB) has inspired stock bulls this year, especially since reporting its Fiscal Q3 earnings, when shares jumped more than 20% in a single trading session and pushed year-to-date gains above 65%.

Although the stock has not yet broken through the $500 level reached in February 2024—or the $560 peak from November 2021—the recent momentum has reignited the debate around valuation, quality, and MongoDB’s role in the expanding data and AI ecosystem.

What’s driving this latest bull run isn’t hype, but rather a rare combination in SaaS based on solid revenue growth in the 20% range, consistent margin expansion, and the continued strength of the Atlas platform. Adding to that, AI traction—while real—is still not material to revenue, which leaves meaningful optional upside that could help justify, or even expand, MongoDB’s already rich valuation multiples.

With that in mind, I remain bullish on MongoDB. Short-term gains are likely more contained, but the long-term setup still points to a compelling path for continued compounding and further multiple expansion.

MongoDB Emerging as a Mature SaaS

Simply put, MongoDB sells a modern, easy-to-use database that’s ideal for applications and AI. Its moat stems from its flexibility, as MongoDB uses a document-based data model that handles images, text, and semi-structured data extremely well. This naturally drives developer preference, making MongoDB a sort of default choice for anyone building a new app. As a SaaS business, most of its revenue is recurring, coming from subscriptions and cloud consumption, with the Atlas platform accounting for roughly 70% of total revenue.

Because most AI-driven apps generate massive amounts of data—often unstructured and requiring much more flexibility—MongoDB stands to benefit from the broader AI wave. This becomes even more relevant as the platform continues adding AI-focused features like vector storage, data pipelines, and native model integrations.

There is some risk that the hyperscalers (Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL)), with their own managed databases, could “steal” share from MongoDB. But that risk is only partial: MongoDB operates in a multi-cloud world, switching costs are high, and its developer ecosystem is enormous.

Overall, the company has shown consistent growth, even if it’s slowing—it’s no longer expanding 50–60% per year as we saw in earlier stages—but growth remains solid and aligned with what would be expected from a technology company that has reached meaningful scale, predictable revenue, and a clearer focus on profitability. MongoDB is no longer the explosive startup it once was. Instead, it’s a maturing SaaS/cloud platform that’s shifting its emphasis toward adjusted profitability (non-GAAP) and cash generation, both of which are becoming the main drivers of its valuation now.

Strong Results With AI Still as a Hidden Upside

To give better visibility into the phase MongoDB is currently going through, the company reported its Fiscal Q3 results on December 2, delivering a solid non-GAAP EPS beat of 67% and a revenue beat of 5.9% above expectations. This is nothing new—MongoDB has surpassed estimates for at least the last four years without a single sequential miss.

Total revenue in Q3 came in at $447.8 million, up 19% YoY, strongly driven by the continued momentum of Atlas, which posted $331.2 million in the quarter—about 30% higher than the same period last year. This once again highlights the very strong demand for cloud services within MongoDB’s ecosystem.

Operating income also grew 21% YoY, reaching $123.1 million, with operating margins at 20%, a 1% expansion versus last year. This points to solid adjusted operating efficiency, even as the company continues to invest heavily across product and go-to-market.

Guidance for Q4 calls for operating margins of 21%, along with an upward revision for revenue—now expected to grow 21–22% for the whole year, with adjusted operating margins around 18%. According to management, most of this improvement comes from revenue growth. The caveat, however, is that part of the margin expansion also came from deferred (non-structural) expenses, which means margin growth could normalize in FY 2027.

On the AI front, one comment from the newly appointed CEO, CJ Desai, stood out, as he emphasized that AI is not yet a material revenue driver. My interpretation is actually bullish—MongoDB’s core business is delivering strong, hype-less growth, and AI remains more of an optional upside than the foundation of the thesis. That takes away the pressure for immediate monetization from AI and strengthens the long-term setup.

Valuation That Demands Perfection but Still Finds Support

And all of this naturally feeds into the debate over MongoDB’s valuation. After all, in a SaaS business transitioning from explosive growth to high growth and efficiency, does it really make sense to pay 84x forward non-GAAP earnings?

The most honest answer is: it depends. If we take revenue growth in the 20–22% range—exactly what MongoDB is guiding for FQ4—and pair that with an adjusted operating margin near 20%, the company comfortably clears the Rule of 40. That places MongoDB among the highest-quality SaaS companies in the market, and premium multiples are not only common but often deserved. On top of that, analysts keep revising both revenue and earnings estimates upward, and consensus still points to long-term EPS growth of ~22% over the next three to five years.

The counterpoint, though, is that an 84x multiple embeds a lot of assumptions: sustained structural margin expansion, AI eventually shifting from “optional upside” to a real growth driver, and top-line growth staying closer to 20% than to the mid-teens. If revenue growth slips and expenses normalize faster than expected, eating into margins, you suddenly have the perfect setup for a sharp derating.

But for now, the company’s recent results—and the reaffirmation of genuinely high-quality growth and profitability—give support to these numbers. In fact, they arguably keep the door open for further multiple expansion, assuming execution continues at this level.

Is MDB a Buy, Hold, or Sell?

The Street’s view on MongoDB is overwhelmingly bullish. Over the last three months, 31 analysts have weighed in, with 26 assigning a Buy and only five calling for a Hold. The average price target sits at $443.53, implying roughly 12% upside over the coming year.

See more MDB analyst ratings

MongoDB’s Quality Justifies Staying Bullish

MongoDB continues to trade like a high-quality database company already well into its high-growth phase and improving efficiency, with AI still acting more as a long-term option than a current growth engine, leaving room for multiple expansion.

At first glance, paying “infra winner” multiples for a database platform growing ~20% per year might feel uncomfortable. But when you factor in that MongoDB is still delivering strong revenue growth, expanding margins, and holding AI as a meaningful card up its sleeve, the picture changes.

As long as the company keeps pushing analysts to revise their top- and bottom-line estimates higher, waiting for a more “benign” entry point may end up being a mistake. For now, I see the setup supporting a conditional Buy on MDB—acknowledging limited near-term asymmetry, but recognizing a compelling long-term opportunity.