Certain Wall Street analysts see triple-digit upside in artificial intelligence (AI) stocks AppLovin and MongoDB.
AppLovin’s superior AI recommendation engine Axon helped drive strong revenue growth in the fourth quarter.
MongoDB believes AI is a generational shift that will boost demand for its document-oriented database platform.
The S&P 500(SNPINDEX: ^GSPC) has fallen 8% from its high year to date as tariffs imposed by President Trump have raised the probability of a U.S. recession. Nevertheless, the Wall Street analysts below see triple-digit upside in AppLovin(NASDAQ: APP) and MongoDB(NASDAQ: MDB).
Michael Pachter at Wedbush in April set AppLovin with a target price of $650 per share. That implies 115% upside from its current share price of $302.
Yun Kim at Loop Capital in March set MongoDB with a target price of $350 per share. That implies 105% upside from its current share price of $170.
Here's what investors should know about these artificial intelligence stocks.
AppLovin: 115% implied upside
AppLovin develops ad tech software that enables developers to market and monetize their applications across mobile and connected TV campaigns. Advertising on its platform has traditionally focused on video games, but the company is expanding into other direct-to-consumer categories with its new e-commerce advertising product.
AppLovin has put a great deal of effort into building its Axon recommendation engine. It began acquiring game studios several years ago to train the underlying machine learning models that optimize targeting, and has since released two major updates. The improvements made along the way have led to superior return on ad spend compared to other targeting solutions, according to Morgan Stanley.
AppLovin reported strong fourth-quarter financial results. Revenue rose 44% to $1.4 billion and GAAP earnings soared 253% to $0.49 per diluted share. Management also said its nascent e-commerce advertising product hit a billion-dollar run rate in mere months, such that it should account for about 10% of revenue in 2025.
CEO Adam Foroughi also highlighted successful pilots beyond direct-to-consumer brands. "This opens up a massive opportunity as there are over 10 million businesses worldwide who advertise online that could eventually use our platform profitably. By delivering incremental value, we position ourself as an engine for growth," he told analysts on the fourth-quarter earnings call.
Despite recent attacks from short-sellers, Wall Street expects AppLovin's earnings to grow 45% in 2025. That makes the current valuation of 67 times earnings look reasonable, especially because AppLovin topped the consensus by an average of 26% in the last six quarters. Investors should consider buying a small position in this growth stock today, but triple-digit returns seem unlikely in the next year due to the uncertain economic environment.
Image source: Getty Images.
MongoDB: 105% implied upside
MongoDB provides database and application development tools. Its document-based architecture offers more flexibility and scalability than relational (SQL) databases, which lends itself to use cases like analytics, artificial intelligence (AI), and e-commerce. Document databases are superior when storing large amounts of data that does not fit neatly into rows and columns, and MongoDB is the most popular document database.
MongoDB reported good financial results for the fourth quarter of fiscal 2025, which ended in January. Its customer count climbed 14% to 54,500, and the number of customers that spend at least $100,000 annually increased 17%. In turn, revenue increased 20% to $548 million, a slight deceleration from 22% growth in the prior quarter. And non-GAAP net income increased 49% to $1.28 per share.
CEO Dev Ittycheria believes artificial intelligence is a "once in a generation shift that will fundamentally reshape industries." MongoDB is investing aggressively in its business to capitalize on that opportunity. That includes growing it workforce, shifting focus to larger customers, and it recent acquisition of Voyage, which provides tools that improve the accuracy and reliability of AI applications. Those investments are currently a headwind to profitability, but should lead to stronger results in the future.
MongoDB currently trades at 6.5 times sales. That is a discount to the three-year average of 14 times sales, and near its cheapest valuation since going public in 2017. But MongoDB also anticipates its slowest revenue growth as a public company in fiscal 2026. Patient investors can buy a small position today, but it would be more prudent to wait for proof AI will reaccelerate sales growth in the future.
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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin and MongoDB. The Motley Fool has a disclosure policy.
