Wedbush on Monday cut its rating on Nice Ltd (NASDAQ:NICE) to “Neutral” from “Outperform” and lowered its 12-month price target to $120 from $170, warning that the customer-experience software provider faces intensifying competition in artificial intelligence and a challenging path to meet its long-term growth ambitions.
The brokerage said NICE is confronting “an increasingly competitive CX AI landscape” at a time when it is prioritizing aggressive multi-year targets laid out at its recent Capital Markets Day. That strategy, Wedbush said, is coming “at the expense of near-term margins, which we view as a risky trade-off.”
NICE, whose shares were trading around $104.50 on Monday aftrnoon, has been investing heavily in agentic AI — the emerging class of autonomous systems expected to underpin next-generation call-center technology. But Wedbush said the market is becoming crowded with both startups and major cloud providers, including Microsoft, Amazon and Google, which “creates a more difficult path for NICE to capitalize” as customers gain more options.
The firm noted that NICE has delivered “one step forward, two steps back-style execution” in recent quarters and has struggled to expand its share despite forecasts that the CX AI market will more than double from $31 billion in 2025 to $72 billion in 2028.
Wedbush also flagged significant execution and profitability risks tied to NICE’s financial targets. The company expects gross margins to compress by about 200 basis points in fiscal 2026 as it ramps cloud infrastructure spending to support international expansion, which is a segment where customers typically spend less than in the US, potentially delaying revenue benefits.
Operating margins are projected to fall to 25% to 26% in fiscal 2026 from about 31% in 2025, before climbing to 27% to 28% in 2028. NICE also anticipates investing roughly $160 million into cloud and AI initiatives and expects AI to account for nearly 30% of cloud revenue by 2028, up from about 12% in 2025.
Wedbush described those assumptions as “aggressive” given rapid AI model advances and heightened competition. The analysts added that a considerable portion of NICE’s expected cloud revenue growth relies on further traction from Cognigy, its conversational AI partner, underscoring challenges in accelerating its in-house cloud strategy.
“We are moving to the sidelines as we believe NICE must show consistency in execution in a difficult environment to regain the Street’s confidence,” the firm wrote.