NICE: Strategic Cloud and AI Investments Support Long-Term Buy Rating Despite Near-Term Margin Headwinds

William Blair analyst Arjun Bhatia has maintained their bullish stance on NICE stock, giving a Buy rating on January 5.

Arjun Bhatia has given his Buy rating due to a combination of factors that, in his view, still support a positive long-term outlook for NICE despite some near-term model adjustments. He acknowledges that management expects lower gross margins in fiscal 2026 as the company steps up spending on cloud and AI capabilities, which he incorporates as a modest headwind of about 200 basis points. He also updates his forecasts to reflect reduced interest income after the Cognigy acquisition, as the transaction lowers the company’s cash position and thus its other income line. Even with these changes, he appears to believe that NICE’s strategic investments in cloud and AI, along with the broader earnings and growth profile, justify maintaining a constructive stance on the stock.

At the core of his Buy thesis is the view that the incremental spending and the acquisition are not purely costs, but enablers of future revenue expansion and competitive positioning. The model revision suggests a disciplined, realistic approach to forecasting rather than a deterioration of the fundamental story. By adjusting margin and income expectations now, Bhatia aligns his projections with management’s guidance while signaling confidence that the company can leverage these investments to drive value over time. As a result, he keeps a favorable rating on NICE, indicating he expects the shares to outperform as these strategic initiatives begin to yield returns in later periods.

Bhatia covers the Technology sector, focusing on stocks such as InterDigital, Ooma, and NICE. According to TipRanks, Bhatia has an average return of -0.4% and a 42.41% success rate on recommended stocks.

In another report released on January 5, RBC Capital also maintained a Buy rating on the stock with a $175.00 price target.