MongoDB CEO Says Enterprises Still Don't Trust AI Enough To Go All-In: Hallucinations, Skills Gap And Risk Aversion Are Slowing Adoption

Despite the unrelenting frenzy surrounding AI and growing enterprise investments in capturing value through it, caution and risk-aversion remain the name of the game, according to MongoDB Inc. MDB CEO Dev Ittycheria.

What Happened: During the company’s first quarter earnings call on Wednesday, Ittycheria said that “Most enterprises are still early in the adoption of AI,” adding that “the real enduring value will come when people start building custom AI apps.”

While he acknowledged growing interest in generative tools and ISV (independent software vendor) solutions, he emphasized that off-the-shelf AI platforms rarely provide a lasting competitive edge.

“What really gives them a competitive advantage is building custom solutions,” Ittycheria said. However, he noted that enterprises are grappling with a lack of internal AI expertise and hesitation around using systems that can produce unreliable or fabricated results.

Ittycheria pointed to several obstacles, including a lack of in-house AI expertise and lingering concerns about the reliability of probabilistic models, which can produce inaccurate or misleading outputs, commonly referred to as “hallucinations.”

MongoDB, which positions itself as a native platform for AI-powered application development, is investing heavily in this space, particularly through its recent acquisition of Voyage AI. Still, the company cautioned that AI-related revenue remains modest in the near term.

“We feel we're well-positioned for this,” Ittycheria concludes. “But it's still early.”

Why It Matters: MongoDB released its first quarter results on Monday, reporting $549 million in revenue, up 21.85% year-over-year, and ahead of consensus estimates at $528 million.

It posted a profit of $1 per share, well ahead of analyst estimates at $0.66, against $0.51 per share during the same period last year.

Price Action: Shares of MongoDB were up 3.09% on Wednesday, trading at $199.73, and are up 14.51% after hours, following its first quarter results.

MongoDB fares poorly on Benzinga’s Edge Stock Rankings, but has a favorable price trend in the short and medium terms. Click here for deeper insights into the stock.

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