Better Database Stock: Oracle Vs. MongoDB

Oracle (ORCL 0.40%) first introduced the relational database (one that can be viewed in tables of rows and columns) in the late 1970s.

While the Oracle database has served the needs of users for decades, the nature of data has changed as computing capabilities have increased. That need has been determined MongoDB (MDB -1.72%) to introduce Atlas, a non-relational database that can store unstructured data types.

However, Oracle responded by introducing its own non-relational database. It has also turned into the fast-growing cloud infrastructure business. Does this answer mean Oracle is still a better software-as-a-service (SaaS) stock for investors, or should they buy MongoDB because it’s leading a sea change in the industry?

The case for Oracle

Given Oracle’s long-standing presence in the technology industry, it is the more stable stock of the two. As the world’s largest database management company, it has been serving customers and shareholders with various IT services for a long time.

The company derives most of its revenue from the cloud services and license support segment. These include its database services, applications such as the e-business suite and PeopleSoft enterprise, and its cloud infrastructure services.

Although it is not among the largest cloud companies, it has about 2% of the cloud market share, according to Statista. Because cloud computing plays a key role in supporting artificial intelligence (AI), Oracle is unlikely to go into decline and could use AI to keep it relevant in the database market.

Image source: Statista.

In the first quarter of fiscal 2025 (ended Aug. 31), revenue of $13 billion was up 6 percent from year-ago levels. This matched the revenue growth rate for fiscal year 2024, which was also 6%. Still, because it limited operating expense growth to less than 2 percent, Oracle reported net income of $2.9 billion for fiscal Q1, up 21 percent from the same quarter last year.

The company’s value proposition has also grown, and it’s driven the stock up about 25% over the past year.

However, the stock has become increasingly expensive, with a P/E ratio of 42 and a price-to-sales (P/S) ratio of 8. Even with earnings growth of more than 20%, this could leave investors questioning its valuation with a recent history of single-digit revenue growth. But amid the continued popularity of the database and software capabilities, the stock should hold its own.

Why investors might consider MongoDB

In contrast, MongoDB is relatively new, having only been around since 2007. As previously mentioned, it derives its revenue from the non-relational database, which could turn the database industry upside down as the traditional database model Oracle is becoming obsolete.

Non-relational databases are notable for their ability to store and manage data types that do not fit into an existing structure. Thus, users can store types of data, such as videos or abstract text, that a more structured database would struggle to handle.

The Atlas database has attracted over 85 million Atlas downloads and clusters. Moreover, its community consists of more than 1 million developers and many of the world’s leading corporations use its services.

However, it has seen a sharp deceleration in its growth in recent quarters as fewer multi-year licensing agreements, which recognize upfront revenue, have come to maturity. In the second quarter of fiscal 2025 (ended July 31), revenue of $478 million was up 13% compared to the same period last year. This was below the 17% increase for fiscal year 2025 and a 31% increase in the previous fiscal year.

Also, the $55 million loss in fiscal Q2 was up from the second quarter of fiscal 2024, when the company lost $38 million.

Slowing revenue growth appears to have had an effect on the stock, which is down more than 20% over the past year.

As a money-losing company, it doesn’t have a P/E ratio, and one has to wonder if the P/S ratio of 12 will attract investors given the slowdown in growth compared to last year. Given this situation, investors may want to stay on the sidelines until they see signs of improvement.

Oracle or MongoDB?

When considering the health of both companies, investors should probably go with Oracle. Of course, MongoDB’s non-relational database could eventually challenge Oracle’s long-standing database business.

However, Oracle continues to grow its software business, and its cloud presence should keep its AI capabilities competitive in the tech market. Additionally, Oracle is turning a profit and offering investors a lower valuation despite becoming an increasingly expensive stock.

Ultimately, unless MongoDB can address its growth deceleration, its stock is unlikely to gain traction at its current price.