NICE Ltd. (NICE): A Bear Case Theory 

We came across a bearish thesis on NICE Ltd. on Valueinvestorsclub.com by dafreddy. In this article, we will summarize the bears’ thesis on NICE. NICE Ltd.’s share was trading at $115.05 as of January 14th. NICE’s trailing and forward P/E were 13.19 and 9.93 respectively according to Yahoo Finance.

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NICE Ltd., together with its subsidiaries, provides AI-powered cloud platforms for customer engagement, and financial crime and compliance worldwide. NICE presents a compelling short thesis as the customer experience (CX) market shifts toward agentic AI, creating structural headwinds for traditional contact center as a service (CCaaS) providers.

Historically, NICE has benefited from the 2015–2022 cloud migration, with its CXone Mpower platform and Enlighten AI generating ~74–75% of total revenue from cloud-based offerings, primarily in the Americas and serving over 25,000 enterprise clients including American Airlines, AIG, Morgan Stanley, and Charles Schwab.

The majority of cloud revenue comes from seat-based CCaaS subscriptions, which rely on deterministic workflows and human agents. These offerings face a secular decline as enterprises increasingly adopt next-generation agentic AI platforms that deliver significantly higher automated resolution rates, reducing the need for human seats. NICE’s growth has already shown early signs of pressure, with decelerating cloud ARR, higher-than-expected churn, and slower new-logo momentum.

The company’s $955 million acquisition of Cognigy amplifies near-term execution risks, as the platform’s agentic capabilities remain limited, integration challenges are significant, and NICE’s management has a weak track record for M&A execution. Simultaneously, a shift toward consumption-based, agentic pricing would cannibalize core seat-based revenue and compress gross margins, a risk largely unaccounted for in Street models.

Taken together, secular seat contraction, integration risks from Cognigy, and structural margin pressure from a business model transition create a high-risk outlook. Under a base-case scenario, NICE could trade below $90 per share as growth slows, R&D costs rise, and investor skepticism intensifies. While catalysts such as commentary on further revisions or margin deterioration may accelerate the rerating, upside risks include successful Cognigy integration, stickier customer adoption, or strategic interest from larger tech players.

Previously, we covered a bullish thesis on NICE Ltd. (NICE) by Relevations in January 2025, which highlighted the company’s advanced generative AI integration, leadership in CX software, and growth potential under new CEO Scott Russell. NICE’s stock price has depreciated by approximately 30% since our coverage due to investor concerns over leadership transition. dafreddy shares a contrarian perspective but emphasizes structural headwinds from agentic AI adoption, seat-based CCaaS decline, and integration risks from the Cognigy acquisition.

NICE Ltd. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held NICE at the end of the third quarter which was 23 in the previous quarter. While we acknowledge the risk and potential of NICE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NICE and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.