A Once-in-a-Decade Opportunity: 1 Super Growth Stock Down 48% to Buy Right Now and Hold for a Decade

While buying a roughed-up stock "on the dip" seems like a no-brainer, the unfortunate truth is that many of these embattled businesses may actually prove to be "falling knives."

However, if investors prioritize high-quality, market-leading, innovative companies, buying the dip can occasionally make perfect sense. I'd argue this is especially true when the stock in question is trading at what appears to be a once-in-a-decade valuation, which is the case for the business we will examine today.

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Operating in three industry verticals buoyed by long-term megatrends, Nice (NASDAQ: NICE) and its artificial intelligence (AI) innovations could prove to be an excellent buy-the-dip candidate, especially since its stock is down 48% from its highs.

Nice looks to build upon its leadership position

Nice is a leading software-as-a-service (SaaS) business, providing AI-powered solutions to enterprises via its cloud platform. The company primarily serves three areas:

• Customer engagement (About 75% of sales): Nice offers end-to-end SaaS solutions that help clients automate their customer service operations while augmenting their human workforce with agentic AI. The cornerstone of this effort is its center-as-a-service (CCaaS) platform, which Forrester ranks as one of the leaders in this niche.
  
• Financial crime and compliance (15% of sales): Nice's AI-embedded tools help corporate customers battle fraud, money laundering, and suspicious activity while providing compliance and surveillance services. It uses machine learning to parse through mountains of financial data and AI to automate more mundane tasks. Many top U.S. and European banks use this service.
• Public safety and justice (10% of sales): In its smallest segment, Nice helps with emergency response optimization and digital evidence management. Nice and Axon Enterprise are the two leaders in this niche, according to IDC, acting like the Coca-Cola and PepsiCo to the public safety and justice market. Nice's offerings are used by 85% of U.S. and Canadian cities and 94% of the United Kingdom's police stations.

Thanks to its leadership in these three niches -- and counting 85 of the Fortune 100 enterprises as customers -- Nice is an undeniable SaaS leader with sales in over 150 countries.

Yet, despite this powerful presence, the company's growth story could still be in its early chapters. With fraud and money laundering schemes increasing in complexity by the day, digital evidence growing exponentially, and AI providing a tailwind in each market, Nice could be positioned for decades of growth if it can successfully harness the power of AI.

Image source: Getty Images.

Nice: AI innovator, not disruptee

Far and away, the most important thing for investors to watch going forward with Nice will be whether it remains an AI innovator, not a disruptee. The company is off to a tremendous start so far, with AI solutions at the forefront of its platform.

In 2024, 97% of Nice's CXone Mpower contracts worth $1 million or more included AI offerings. This figure grew to 100% as of the first quarter of 2025, demonstrating that the company is, if nothing else, AI-first.

Furthermore, while overall cloud revenue grew 12% in Q1, Nice's AI and self-service sales grew by 39%. This data point will be paramount to watch going forward, as this outsize growth suggests that Nice is leading the AI innovation race, rather than getting disrupted by it.

Similarly, its cloud net retention rate of 111% highlights additional customer "buy-in." Measuring the spending of existing customers from last year to this year, this 11% increase indicates that the company is successfully upselling and cross-selling its new solutions, most likely AI-powered offerings.

A once-in-a-decade valuation

Despite reporting top-notch AI sales growth, Nice's shares slid following its Q1 earnings, mainly due to what the market deemed weak guidance. This drop leaves the company trading at just 14 times free cash flow (FCF).

NICE Price to Free Cash Flow data by YCharts

This price-to-FCF (P/FCF) ratio of 14 is near a decade-long low and is almost half of the company's historical average of 27. Even accounting for the dilutive effects of stock-based compensation, Nice trades at just 18 times FCF, far below the S&P 500's average P/FCF ratio, which is somewhere north of 30.

Perhaps the biggest signal that Nice's valuation today may be a once-in-a-decade opportunity comes from management currently buying back shares at the fastest rate in the company's history.

NICE Stock Buybacks (Quarterly) data by YCharts

Nice is armed with more than $1 billion in net cash, compared to its market capitalization of $11 billion, so it could easily continue buying back shares at what looks like an incredible valuation.

Altogether, Nice's combination of leadership positioning, AI integration, and discounted valuation makes it a super growth stock to buy on the dip. However, it'll be of the utmost importance to keep an eye on Nice's AI sales in each quarterly update and ensure the company remains the AI innovator, not the disruptee.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Josh Kohn-Lindquist has positions in Axon Enterprise and Coca-Cola. The Motley Fool has positions in and recommends Amazon, Axon Enterprise, and Nice. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.