Shares slump despite strong Q3 results as investors digest heavier AI spending, lower 2026 margins and fresh analyst downgrades — while new CX partnerships and leadership moves underscore NICE’s long‑term AI ambitions.
Shares of NICE Ltd. (NASDAQ: NICE; TASE: NICE) tumbled to their lowest level since 2019 on Tuesday after the Israeli software company used its Capital Markets Day to outline an aggressive AI‑first investment plan that will compress margins in 2026, even as it highlights accelerating cloud and AI growth and announces a new strategic partnership with IGT Solutions. [1]
The stock’s sharp slide prompted a wave of fresh price target cuts from major Wall Street firms, but most analysts still rate NICE as an “Outperform” or “Buy” and see substantial upside from current levels. [2]
NICE stock sells off after Capital Markets Day
NICE shares fell roughly 10–15% in U.S. trading on Tuesday, touching fresh 52‑week lows around the low‑$100s, according to multiple analyst notes that referenced intraday levels near $120 and then around $109 later in the session. [3]
On the Tel Aviv Stock Exchange, where NICE is also listed, the stock plunged more than 16% on Tuesday, following a 9% drop in New York on Monday, pushing the company’s valuation down more than 30% year‑to‑date and to its lowest point since 2019. [4]
The sell‑off came just days after investors had cheered NICE’s third‑quarter earnings: on November 13, the company reported Q3 2025 revenue of $732 million, up 6% year‑on‑year and at the high end of guidance, with cloud revenue rising 13% to $562.9 million. GAAP diluted EPS increased 23% to $2.29, while non‑GAAP EPS grew 10% to $3.18. [5]
NICE also raised its full‑year 2025 guidance, forecasting non‑GAAP revenue of $2.932–$2.946 billion (about 7% growth at the midpoint) and non‑GAAP EPS of $12.18–$12.32 (about 10% growth at the midpoint). [6]
In the immediate aftermath of the earnings release, Simply Wall St. noted that statutory EPS of $2.29 came in about 15% below prior analyst estimates, but consensus 2026 forecasts still pointed to nearly 10% revenue growth and a 30% jump in earnings, with the TASE‑listed shares initially climbing around 8% to ₪438. [7]
The mood changed dramatically after management’s Capital Markets Day presentations in New York on November 17.
Capital Markets Day: heavier AI spending, softer 2026 margins
At Capital Markets Day, CEO Scott Russell and his team laid out a more aggressive AI‑first roadmap centered on the company’s CXone Mpower platform and its recently closed $955 million acquisition of German conversational AI specialist Cognigy. [8]
Key elements of the new plan include: [9]
- Significant incremental AI investment: NICE plans roughly $160 million of extra investments over the next year in AI infrastructure, R&D and go‑to‑market, amounting to more than 15% of its previously projected 2026 EBIT, according to DA Davidson and Cantor Fitzgerald.
- Margin reset in 2026: While the company expects 2025 operating margins to peak around 31%, it guided to a drop to about 25–26% in 2026 as AI spending ramps, before margins gradually recover toward 26–28% by 2028.
- Cloud and AI growth acceleration: Management is targeting 12–14% total revenue growth and 17–19% cloud revenue growth by 2028, with cloud expected to contribute about $3.5 billion in revenue, including roughly $1 billion directly from new AI capabilities.
Israeli tech outlet CTech summarized the investor reaction bluntly: Investor Day, usually designed to boost sentiment, had the opposite effect, with markets balking at the sharper‑than‑expected margin drop even as NICE pitched a bolder AI strategy following the Cognigy acquisition. [10]
According to CTech, Cognigy generated around $85 million in annual revenue but remained unprofitable at the time of the deal. NICE sees the platform as central to its plan to let AI agents handle the bulk of customer interactions, especially for large enterprises, but investors appear uneasy about paying for that transition via a multi‑year margin dip. [11]
Wall Street cuts price targets — but still sees upside
Tuesday’s sell‑off was accompanied by a flurry of analyst moves, almost all of which lowered price targets while maintaining generally positive ratings:
- RBC Capital lowered its price target from $190 to $175 but kept an Outperform rating, calling its view “incrementally positive” on cloud trajectory, medium‑term financial framework and AI‑driven growth, and pointing to a strong free‑cash‑flow yield and low PEG ratio. At the time of the note, RBC highlighted NICE trading near a 52‑week low around $120.86 and down about 10.5% on the day. [12]
- Morgan Stanley cut its target from $193 to $160 while reiterating an Overweight rating, citing concern over near‑term investment costs tied to AI initiatives but arguing the current valuation — around a low‑teens forward P/E — looks attractive if the company delivers on its accelerated growth targets. [13]
- Cantor Fitzgerald trimmed its target from $154 to $133 and maintained a Neutral stance, noting that NICE’s incremental AI investments could pressure margins in the near term even as cloud growth potentially reaccelerates to the high‑teens by 2028. [14]
- DA Davidson reduced its target from $150 to $130, also with a Neutral rating, framing the stock as undervalued versus its long‑term potential but acknowledging investor discomfort with the 2026 margin reset and heavy near‑term spend. [15]
- Mizuho cut its target from $185 to $150 while keeping an Outperform rating, describing the estimate reset after Capital Markets Day as a possible buying opportunity despite push‑back on the lower profitability outlook and skepticism about whether the extra AI spend will translate into faster growth. [16]
- Via GuruFocus, Rosenblatt Securities is also shown reducing its target from $190 to $175 while reiterating a Buy rating, part of a broader pattern of target cuts following the event. [17]
Other firms, including Jefferies and Piper Sandler, have also trimmed targets (Jefferies to around $136, Piper to approximately $122), generally flagging the same near‑term margin pressure versus longer‑term AI opportunity. [18]
Despite the wave of downgrades, consensus data compiled by GuruFocus shows: [19]
- An average 12‑month price target of about $197, with a high estimate of $300 and a low of $140 — implying roughly 60%+ upside from recent prices.
- A consensus rating around 2.1 on a 1–5 scale (1 = Strong Buy, 5 = Sell), equivalent to “Outperform.”
- A GuruFocus “GF Value” estimate of roughly $255, more than double the stock’s recent trading level.
In other words, the Street is re‑marking its models down, but most major houses still believe the stock is mis‑priced to the downside if NICE can execute.
Expanded partnership with IGT Solutions underlines AI CX push
While investors were focused on margins, NICE also announced new business momentum on Tuesday.
The company unveiled an expanded strategic partnership with IGT Solutions, a global BPO and CX provider, under the NICE Strategic Partner Program. IGT will deploy NICE’s CX AI platform CXone Mpower to support aviation and travel clients across more than 30 delivery centers, using AI to reduce handle times, improve satisfaction scores and orchestrate seamless omnichannel customer journeys. [20]
Under the expanded deal, IGT plans to build offerings around the full CXone Mpower ecosystem — including enterprise‑grade voice services, NICE Cognigy conversational AI and NICE Feedback Management — all delivered from a unified cloud platform. [21]
The announcement reinforces NICE’s message that its AI‑first strategy is not just theoretical, but already being embedded in large‑scale customer deployments.
Leadership: new COO from Disney to drive Global Customer Operations
Another key development around Capital Markets Day is a leadership upgrade aimed at tightening execution as NICE scales its AI platforms.
On November 17, the company named Arun Chandra as Chief Operating Officer, effective December 1, 2025. Chandra will lead the newly formed Global Customer Operations division, overseeing partners, customer success and services, marketing, IT, global business operations and corporate security. [22]
Chandra most recently served as Senior Vice President, Customer Experience at The Walt Disney Company, where he helped modernize CX for Disney’s $24 billion streaming business and deployed AI and automation to improve engagement and reduce friction for over 195 million subscribers. He previously held senior roles at Meta and Hewlett Packard Enterprise. [23]
Analyst notes — including RBC’s — highlighted the appointment as a positive signal for operational discipline and customer‑centric execution at a time when NICE is asking investors for patience as it reinvests aggressively in AI. [24]
Fundamentals: cloud, AI ARR and long‑term targets
Behind the market volatility, NICE continues to show solid operating metrics:
- In Q3 2025, AI ARR grew 49% year‑over‑year, or 43% excluding Cognigy, with AI capabilities included in every new seven‑figure CX deal, according to the company’s earnings release. [25]
- Cloud revenue now accounts for the majority of the business and is growing faster than total revenue, up 13% in Q3 and expected to grow 12–13% for full‑year 2025. [26]
- NICE has no net debt after repaying all outstanding borrowings in Q3, ending the quarter with roughly $456 million in net cash and investments and generating operating cash flow of about $190.5 million. [27]
At Capital Markets Day, management framed its mid‑term financial model as follows: [28]
- 2025: 7–8% total revenue growth; 12–13% cloud growth; ~31% operating margin; 19–20% FCF margin; capital returns (buybacks/dividends) >50% of FCF.
- 2026: 7–9% total revenue growth; 13–15% cloud growth; 25–26% operating margin; 18–19% FCF margin; capital returns still >50%.
- 2028 targets: 12–14% revenue growth; 17–19% cloud growth; 26–28% operating margin; 20–21% FCF margin; capital returns >50%.
GuruFocus’ analysis notes that NICE currently trades near multi‑year lows on P/E, P/S and P/B multiples despite a three‑year revenue CAGR of over 13%, strong margins and a very conservative balance sheet (debt‑to‑equity around 0.02). [29]
Ownership shifts and sentiment
On the institutional side, recent 13F filings show Black Creek Investment Management trimmed its NICE position by about 14%, selling roughly 235,000 shares but still keeping the stock as its third‑largest holding, while Y.D. More Investments also modestly reduced its stake. [30]
MarketBeat’s aggregation of analyst views still categorizes NICE as holding a “Moderate Buy” consensus rating, even as some institutional holders rebalance exposure following the stock’s sharp drop. [31]
What to watch from here
For investors and industry watchers tracking NICE stock news today, the key debates emerging from November 18, 2025 can be boiled down to a few questions:
- Can NICE turn its AI spending into outsized growth?
Management’s plan hinges on Cognigy and CXone Mpower driving a step‑change in cloud and AI revenue growth by 2028. Execution — particularly cross‑selling into existing enterprise customers and partners like IGT Solutions — will be scrutinized closely. [32] - Will margins rebound as promised?
The market’s biggest concern is the 2026 operating margin dip to the mid‑20s. NICE needs to demonstrate that this is a temporary trough, not a new normal, and that AI investments have clear payback in revenue and profit growth. [33] - Is the current share price mispricing long‑term value?
With the stock at multi‑year lows and consensus targets clustering around $197, analysts see a wide gap between market sentiment and NICE’s fundamentals and long‑term outlook — but investors may demand proof before re‑rating the shares. [34] - How quickly can the new COO influence operations and customer outcomes?
Arun Chandra’s track record at Disney, Meta and HPE suggests a focus on scaled, data‑driven operations. The speed with which he can tighten execution across Global Customer Operations may influence both customer satisfaction and margin outcomes over the next few years. [35]
Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Always conduct your own research or consult a licensed financial advisor before making investment decisions.
References
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