MongoDB (NASDAQ:MDB) saw its stock outlook downgraded by Loop Capital on Tuesday, as the investment firm lowered its rating from Buy to Hold and slashed its price target from $350 to $190. The move reflects mounting concerns over the company’s slower-than-anticipated growth in artificial intelligence (AI) workloads and weaker market traction for its flagship Atlas cloud database service.

In its note to investors, Loop Capital pointed to recent industry checks that suggest MongoDB’s Atlas platform is struggling to gain meaningful traction. “Our latest research indicates that market adoption of the Atlas platform remains tepid,” the analysts wrote. “If this trend persists, it could hinder the pace at which AI-related workloads scale on the platform.”

Although enthusiasm around AI continues to build across the tech sector, Loop warned that MongoDB is unlikely to reap immediate rewards. The firm emphasized that the cloud database market remains fragmented, with enterprises showing little inclination to standardize on a single vendor like MongoDB for all AI-related deployments.

“Rather than consolidating, many organizations are expected to adopt a diverse mix of platforms for AI initiatives,” the note added. This fragmented approach, Loop argues, could lead to MongoDB lagging behind broader AI deployment trends.

The report also highlighted another challenge: the emergence of generative AI (GenAI) is reducing the complexity of software development, making platform consolidation less attractive to large enterprises. As a result, companies may increasingly gravitate toward more cost-effective or open-source alternatives, such as PostgreSQL.

Despite MongoDB’s continued investments aimed at large enterprise clients, Loop sees limited evidence of success. “The push for unified database platforms within large companies is losing relevance as development and maintenance costs become less of a pain point,” the analysts explained.

Loop did acknowledge MongoDB’s strong developer ecosystem—boasting over 7 million developers—as a long-term asset. However, the firm cautioned that short-term headwinds remain. In particular, it noted uncertainties around the upcoming CFO transition, with Mike Berry set to take over the role later this month.

Although Loop maintained its near-term financial estimates for MongoDB’s first quarter, it revised down its expectations for future growth of the Atlas platform. The downgrade reflects continued softness in new workload adoption and a slower-than-expected lift from AI integration.

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