Why Nice Stock Popped Today

Key Points

• Nice acquired conversational and agentic artificial intelligence specialist Cognigy for $955 million.

• The two AI leaders combine to form a powerhouse in the customer experience niche.

• With Nice's AI-related and self-service sales already growing by 39% prior to the deal, the company is launching full-speed ahead into today's most important technology.

• 10 stocks we like better than Nice ›

Shares of enterprise software leader Nice (NASDAQ: NICE) rose 6% as of noon ET on Monday, according to data provided by S&P Global Market Intelligence.

True to its artificial intelligence (AI) focus, Nice acquired agentic AI specialist Cognigy for $955 million this morning.

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This acquisition prompted a positive reaction from the market, and I think it is deserved.

Nice: AI innovator, not disruptee

Back in June, I wrote about Nice as a potential once-in-a-decade opportunity. At the end of the article, I explained, "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."

Acquiring Cognigy today, Nice reinforced its chances of remaining an AI innovator, rather than a disruptee.

Image source: Getty Images.

By adding Cognigy, Nice added new conversational and agentic capabilities to its customer experience platform, which accounts for 75% of its sales.

The Cognigy AI platform offers its services in over 100 languages and serves more than 1,000 brands, including Adidas, Toyota Motor, and Nestle. Despite its start-up nature, Cognigy was already recognized as a leader in conversational AI according to rankings from Gartner Magic Quadrant and Forrester Wave reports.

With Nice itself already counting 85 Fortune 100 companies as customers, this union creates an AI powerhouse in the realms of contact centers as a service and customer engagement in general.

In the first quarter of this year, Nice grew its AI-related and self-service sales by 39%. Adding Cognigy's AI capabilities, client list, and cross-selling potential should only add fuel to this fire.

Even after today's pop, Nice still trades at just 15 times free cash flow. This discounted valuation, paired with Cognigy's addition, keeps Nice a once-in-a-decade opportunity in my eyes.

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Josh Kohn-Lindquist has positions in Adidas Ag. The Motley Fool has positions in and recommends Nice. The Motley Fool recommends Gartner and Nestlé. The Motley Fool has a disclosure policy.