Nov 21, 2024

In Thursday’s trading session, shares of MongoDB (MDB) and fellow data software company Elastic (ESTC) experienced notable increases, buoyed by a robust earnings report from enterprise software counterpart Snowflake (SNOW).

MongoDB’s stock surged over 15%, reaching $325.96, while Elastic saw a rise of more than 5%, trading at $93.55. These gains come after a challenging summer for both companies, with MongoDB’s stock down 31% year-to-date and Elastic down 18%. In contrast, Snowflake’s stock rallied over 31%.

Evercore ISI analyst Kirk Materne noted in a client memo that “While the obvious bank shot from SNOW will be other consumption names (such as Datadog (DDOG) and MongoDB), we believe some of the move in software is simply investors having to gross back up after overly punishing software this summer.”

The term “consumption” refers to companies that charge based on the usage of their products. Notably, other tech stocks that have not faced similar challenges are also seeing upward momentum today.

Oracle (ORCL), a leader in database software, is up 1.9% at $194.37, contributing to an impressive 80% increase for the year. Confluent (CFLT), a data streaming firm, has risen 4.5% to $29.89, slightly outperforming the S&P 500 with a 28% year-to-date gain.

The iShares Expanded Tech-Software ETF (IGV), which includes shares from over 100 enterprise software companies, is up 1% in Thursday’s trading.

These stock movements are likely influenced by strong quarterly results and favorable market insights from Nvidia (NVDA), a leader in AI technology. Wedbush analyst Daniel Ives commented that Nvidia’s performance indicates the tech industry is “just starting the next stage of the AI Revolution being led by Nvidia with Blackwell driving massive growth in 2025 and beyond.” Ives further suggested that spending on Nvidia’s Blackwell AI chips may create a “multiplier effect” across the broader technology sector.

Both MongoDB and Elastic have garnered attention on Wall Street as promising candidates to benefit from the anticipated surge in enterprise AI spending in 2024. MongoDB, which provides database solutions for enterprises, saw its stock price double in 2023, while Elastic, known for its leading search software, experienced similar growth.

However, this year has presented challenges. MongoDB’s stock fell 24% in late May following a disappointing sales forecast and has yet to recover. Elastic’s stock dropped 28% after its latest earnings report in late August, which also featured a weaker-than-expected sales outlook.

As of Thursday, MongoDB’s stock is trading more than 40% below its 52-week high reached in February, while Elastic is down 25% from its own 52-week peak, also attained in February.

Looking ahead, Elastic’s stock gains will soon be tested as the company is set to report its fiscal second-quarter earnings after market close today. Analysts anticipate adjusted earnings growth of 3% year-over-year to 38 cents per share, with sales projected to increase by 14% to $354 million, according to FactSet.

MongoDB is scheduled to report its earnings on December 9, with analysts forecasting a 30% decline in adjusted earnings to 67 cents per share, while sales are expected to rise by 15% to $497.6 million.

Last week, MongoDB’s stock broke out above a buy point of $297.68, according to MarketSurge pattern recognition. Although shares retreated below this level in recent days, they rebounded strongly on Thursday, surpassing the long-term 200-day moving average.