Optimizing AWS Lambda performance requires understanding its container technology and caching mechanisms. When invoking a Lambda function, there's an initial penalty hit due to bootstrapping a new container, but subsequent calls within 5 minutes can reuse the same container, saving time. To optimize performance, declare the database connection object outside the handler method, as this allows for reusing the connection across calls. Additionally, set `context.callbackWaitsForEmptyEventLoop` to `false` in Node.js Lambda functions and try to reuse the database connection using `MongoClient.connect(Uri)` only if it's not null and connected. Most importantly, do not close the database connection to allow it to be reused by subsequent calls. By following these steps, developers can significantly reduce the execution time of their Lambda functions.