We recently compiled a list of the 10 Best Cheap Technology Stocks To Buy According to Analysts. In this article, we are going to take a look at where NICE Ltd. (NASDAQ:NICE) stands against the other cheap technology stocks.
Doug Clinton, the founder and CEO of Intelligent Alpha, joined a discussion on CNBC’s ‘Squawk Box’ on February 12 regarding the state of the tech sector, AI tech race, how heavy AI investments and tariff uncertainty have affected mega-cap tech stocks over the past month. When asked to rate how bad it has been on a scale of 1 to 10, Clinton replied that about 2.5 weeks ago, during what he called “Deep Tech Monday,” it was probably around an 8.5 or 9 due to significant pressure. However, since then, things have calmed down following the earnings reports from hyperscalers like Google and statements from industry leaders such as Sam Altman indicating that the capital expenditure boom in AI will continue.
Clinton emphasized that while they remain bullish on tech overall, not all companies are equally leveraged to AI. For instance, Meta is highly exposed due to its leadership in open-source AI with models like Llama. Google and NVIDIA are also heavily tied to AI advancements. On the other hand, Amazon and Apple might have less exposure compared to other hyperscalers. Interestingly, the iPhone maker recently made a deal with Alibaba to integrate their AI models onto iPhones in China. Regarding tariffs and trade tensions with China, Clinton suggested that while these issues should be monitored for hyperscalers who have significant chip production exposure, he does not believe they will be overly impacted by tariffs due to their limited involvement in import/export activities directly affected by tariffs. Instead of focusing heavily on tariff risks at this point, he believes it’s more important for investors to track how well these companies’ AI products evolve and how customers adopt them.
He also expressed skepticism about a protracted trade war with China under Trump’s negotiation tactics. He noted similarities with recent negotiations involving Canada and Mexico where border policies were adjusted without prolonged conflict over tariffs. While acknowledging potential impacts if tensions escalate significantly, particularly affecting chip producers, Clinton does not foresee this as an immediate concern within the next year. If China were involved in a protracted trade war with the US, it could be very bad for some companies. However, Clinton doesn’t think this scenario is likely because Trump often seeks quick negotiating wins rather than prolonged conflicts.
Methodology
We used a stock screener to compile a list of tech stocks with a forward P/E ratio of under 15. We then selected 10 stocks that had high average upside potential (over 30%) and were the most popular among elite hedge funds. The stocks are ranked in ascending order of their average upside potential. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Note: All data is sourced as of February 13.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A data scientist sitting in front of a monitor to review the performance of AI-driven digital business solutions.
NICE Ltd. (NASDAQ:NICE)
Forward P/E Ratio: 14.22
Average Upside Potential: 45.43%
Number of Hedge Fund Holders: 24
NICE Ltd. (NASDAQ:NICE) provides AI-driven cloud platforms for digital business solutions globally. Its offerings include CXone for customer experience, Enlighten AI engine, smart self-service solutions, and journey orchestration. It also provides solutions for agent enablement, interaction recording, digital evidence management (Evidencentral), and financial crime and compliance (X-Sight, Xceed). It uses AI and analytics for fraud prevention and AML (Anti-Money Laundering) compliance.
The company received a Buy rating from DA Davidson analysts on January 29, with a $225 price target. The analysts cited its strong financials and commitment to AI innovation for this sentiment, highlighting its investment in platforms like CXone and Enlighten. The company’s Q3 revenues were up 15% to $690 million, driven by strong AI tool demand.
Its AI-driven solutions are being adopted across diverse sectors. Fulton Bank recently implemented Enlighten-powered tools like CXone Mpower Copilot, Autopilot, and Expert to enhance customer service through AI-driven self-service and agent support. Beyond contact centers, the company’s AI capabilities are streamlining operations for organizations like the Monterey County District Attorney’s Office, which selected NICE Justice to modernize digital evidence management, becoming the 4th California prosecutor’s office to do so. Similarly, Prosper, a financial services company, partnered with NICE Ltd. (NASDAQ:NICE) for its CX transformation, using solutions like CXone Mpower and SmartReach to improve customer engagement and operational efficiency.
Broyhill Asset Management is bullish on NICE Ltd. (NASDAQ:NICE), and believes that its cloud-based software and AI integration will drive revenue growth as competitors struggle. Here’s what it said in its Q3 2024 investor letter:
“NICE Ltd. (NASDAQ:NICE) develops software to run customer contact centers. The company’s cloud-based software enables the implementation of greater functionality versus its on-premise competitors. Many of these on-premise competitors, which do not offer cloud-based products, have stopped rolling out new features. This has prompted their customers to switch to companies like Nice where they have wider access to new developments. Artificial intelligence is a large part of this shift and of our differentiated view. The market views AI as a threat to Nice’s core operations; we view it as an enabler of additional revenue streams with improved economics.”
Overall NICE ranks 5th on our list of the best cheap technology stocks to buy according to analysts. While we acknowledge the potential of NICE as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NICE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
