13 Cheap AI Stocks to Buy According to Analysts

Page 7 of 11

5. NICE Ltd. (NASDAQ:NICE)

Number of Hedge Fund Holders: 28

Average Upside Potential: ~19.8%

Forward P/E as of May 12: ~13.4x

NICE Ltd. (NASDAQ:NICE) offers cloud platforms for AI-driven digital business solutions. The company integrates AI and ML in its core offerings, mainly customer experience, workforce optimization solutions, and contact center. William Blair analyst is bullish on the company’s stock. The analyst opines that NICE Ltd. (NASDAQ:NICE) remains well-positioned for future growth, primarily with the higher AI adoption in contact centers. The analyst believes that if the company can address operational issues, there can be a positive shift in the dynamics, improving cloud revenue growth. Furthermore, the potential for margin expansion with the help of operating expense leverage aids the positive outlook.

NICE Ltd. (NASDAQ:NICE)’s strong emphasis on AI integration throughout the product portfolio places it well for long-term growth and competitive differentiation. The increased AI attach rates across the large cloud deals exhibit that customers are seeing strong value in the company’s AI-enabled solutions. With AI continuing to evolve and mature, NICE Ltd. (NASDAQ:NICE)’s early investments can significantly pay off. Its AI capabilities can result in efficient and effective customer interactions and new revenue streams stemming from AI-driven services.

RS Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“We initiated a position in NICE Ltd. (NASDAQ:NICE), a leading call center software provider, at a 7.5% free cash flow yield. The stock has been weak because of concerns that artificial intelligence (AI) will reduce the number of call center employees and that larger companies, including Microsoft and Salesforce, Inc., will leverage their AI strength to take market share. We believe both of these concerns are misplaced. If AI is successful in reducing headcount at call centers, it will provide massive value to NICE’s customers and NICE will be able to charge more for its software, creating a win-win situation. Additionally, although large competitors are very focused on AI, we think it is unlikely that NICE as the incumbent will be displaced. Call center jobs are repetitive and low technologically, so the key to winning is not who has the most powerful AI model, but instead who has the largest data pool of relevant data to train its AI model. NICE is competitively advantaged over any new entrant because it has the largest data repository of call center interactions. If NICE is successful in deploying AI within its customers, NICE’s revenue growth should accelerate, and we expect the market will pay a higher multiple.”

Page 7 of 11