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The rating adjustment comes after a 108% stock rally in 2023, which placed MDB as the second-best-performing growth software stock.

“[W]ith the stock now matching the peak forward revs multiple of ~16x revs (on street estimates) over the last two years, it seems an appropriate time to take our foot off the accelerator and move our rating from a Buy to a Neutral,” the analysts said.

While UBS remains favorable towards the robust long-term growth narrative of around 30%, it anticipates a pause in the stock’s re-rating unless there is a substantial pull-through of revenue from AI workloads in 2024.

“[W]hile we’re enthusiastic about an AI-driven database growth catalyst, we’re not picking up material evidence that this is playing out yet – it may prove to be a 2025 catalyst, 2H24 at the earliest.”

“This is consistent with our recent AI Enterprise survey pointing to only modest AI spend in 2024,” they said.

MongoDB shares are already down 11.5% this year.

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