History Says the Nasdaq Will Soar: 2 Artificial Intelligence (AI) Stocks to Buy Now, According to Wall Street

The Nasdaq Composite's 12% annual return over two decades is projected to continue, bolstered by AI-driven tailwinds. AppLovin, an adtech company leveraging its AI Axon engine for superior targeting, reported Q1 revenue up 40% and net income up 149%, with analysts forecasting 40% upside. Similarly, MongoDB, a leading document database provider integrating AI capabilities, saw Q1 revenue increase 22% and non-GAAP earnings jump 96%, with analysts projecting 34% upside, highlighting both firms' strong financial performance and strategic alignment with AI growth.

Analysis

The provided analysis presents a strongly bullish case for AppLovin (APP) and MongoDB (MDB), positioning both as significant beneficiaries of the secular growth trend in artificial intelligence. AppLovin's competitive edge is attributed to its AI-driven ad recommendation engine, Axon, which has reportedly enabled it to outperform the broader in-app advertising market. This operational strength is reflected in its Q1 financial results, where revenue increased 40% to $1.4 billion and GAAP net income surged 149%. Notably, management's guidance for 69% advertising sales growth in Q2 indicates strong near-term momentum, though this is needed to offset a concurrent decline in its mobile games segment. Similarly, MongoDB is highlighted for its document-oriented database, a technology well-suited for AI applications. The company's strategic focus is underscored by its MAAP program and the acquisition of Voyage AI. Its Q1 performance was robust, with revenue growth accelerating to 22% and non-GAAP earnings per share increasing 96%. A 16% growth in customer count, the highest in six years, signals accelerating market adoption. From a valuation perspective, MongoDB's price-to-sales ratio of 7.8x is presented as a compelling discount to its three-year average of 13.2x, while AppLovin's 61x earnings multiple is justified against a forecasted 53% annual earnings growth rate through 2026.

Key Decisions for Investors

• Investors with a long-term bullish thesis on artificial intelligence should consider positions in AppLovin and MongoDB, as both companies demonstrate strong fundamental growth and strategic alignment with AI-driven demand.
• For AppLovin, the key consideration is whether its aggressive 53% projected earnings growth can justify its 61x earnings multiple, while also monitoring if the high-growth advertising segment continues to offset declines in its mobile games business.
• For MongoDB, the current valuation at 7.8 times sales represents a significant discount to its historical average, offering a potential entry point for investors confident in its ability to capture market share in the database management sector.
• Given the high-growth profile of both stocks, a prudent approach could involve initiating smaller positions and averaging in over time to mitigate volatility and entry-point risk.