(Reuters) -Shares of MongoDB surged about 31% on Wednesday after the database software firm said its Atlas cloud service was seeing increasing usage as more customers build AI applications on the platform.
MongoDB was set to add more than $5.2 billion to its $17.51 billion market capitalization.
Generative AI apps process vast amounts of unstructured data, driving demand for cloud databases such as Atlas that can quickly retrieve information and also power chatbots, recommendations and search tools.
As companies build and deploy more AI features, usage of AI-ready databases and related services has been rising. This has translated into faster revenue growth for platforms that integrate with major clouds and AI tools.
“We are encouraged by MongoDB’s strong go-to-market momentum across startup and enterprise customers, thanks to the reallocation of market resources and product enhancements in artificial intelligence,” said Luke Yang, analyst at Morningstar.
Analysts also said reallocation of sales resources to focus on enterprise clients will drive usage from MongoDB’s biggest customers.
The company raised its annual adjusted profit forecast to between $3.64 and $3.73 per share, from its prior forecast of $2.94 to $3.12 per share.
It expects revenue to be between $2.34 billion and $2.36 billion in the fiscal year ending January, up from its prior forecast of $2.25 billion to $2.29 billion.
Both revenue and profit forecasts were above Wall Street estimates.
More than 15 analysts raised their price target for the stock. The average rating for the company’s shares are “Buy”, with a median price target of $325.
Its shares trade 58.6 times the profit estimates, compared with 140.91 for Snowflake and 32.85 for Oracle.
(Reporting by Akash Sriram in Bengaluru; Editing by Krishna Chandra Eluri)
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