We recently published a list of the 8 Best Long Term Tech Stocks To Invest In Now. In this article, we are going to take a look at where NICE Ltd. (NASDAQ:NICE) stands against the other best long term tech stocks to invest in.
The technology sector came to the market’s rescue in 2023 after the disastrous macroeconomic conditions of 2022. Investments in advanced technologies like generative AI continue to show strong potential for future business growth.
According to CNBC’s Q3 CFO Council survey, 48% of the CFOs said that the tech industry’s growth will outperform all other sectors over the next six months. Moreover, in a September 23 interview with CNBC, Investment Management Partner at Callan Family Office, RaeAnn Mitrione highlighted that the tech sector has been a major beneficiary of the recent Fed rate cut. Lower interest rates are favorable for tech companies, which often thrive in such environments.
The ongoing AI theme has also been a key driver of tech’s strong performance. Additionally, she mentioned that mega-cap tech stocks were previously seen as a safe haven during economic uncertainty, but as the rate environment shifts, the focus may broaden to include smaller, more economically sensitive sectors. Nonetheless, tech’s strong momentum, fueled by AI, is likely to persist for some time.
Optimism in Global Tech Spending for 2024
According to Deloitte’s 2024 technology industry outlook, global tech spending slowed due to high interest rates, economic concerns, and geopolitical issues in 2023. However, optimism is growing for 2024, with projected global IT spending growth of 5.7% to 8%. Some of the growth areas include software, IT services, and AI investments, with AI spending potentially reaching $200 billion by 2025. Cloud computing and cybersecurity are also expected to see strong demand.
The report states that Gen AI is gaining traction but it is expected to grow modestly in 2024, yet more strongly in 2025, with its integration into software and business processes driving productivity and efficiency. AI hardware demand is set to exceed $50 billion next year, while companies continue exploring AI monetization strategies.
Harnessing AI for Greater Energy Efficiency
Additionally, the growing influence of big tech companies and the increasing reliance on AI have led to a significant rise in energy demand. We discussed this in our article about the 13 Best Big Tech Stocks To Buy Now. Here is an excerpt from the article:
“A recent notable trend that people have begun to see because of the rise of big tech companies and the growing use of AI is a greater demand for power. Many major tech companies are beginning to require more energy, with the AWS-owner going as far as buying a nuclear-powered data center for $650 million recently.
The primary driving force for this rising demand is the need to develop AI. Many energy-conscious investors may see this new trend as a red flag for big tech. However, Jensen Huang has noted that while AI takes a ton of energy to train, once developed and trained, it will also help save energy. He particularly noted that AI is going to become so advanced through this development that it will eventually end up offering solutions that can change the way we use energy, making our operations endlessly more energy efficient.”
While concerns about the electricity needed to power AI are justified, according to industry pioneers like Nvidia CEO Jensen Huang, the technology itself will help solve that problem.
Our Methodology
For this article, we used the Finviz stock screener to identify 27 tech stocks with market caps of above $10 billion, Buy or Buy-equivalent ratings from analysts, and over 20% average price target upside. We narrowed our list to 8 stocks with the highest average analyst price target upside as of September 26. The best long term tech stocks are listed in ascending order of their average analyst price target upside.
We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
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).
Is NICE Ltd. (NASDAQ:NICE) the Best Long Term Tech Stock To Invest In Now?
NICE Ltd. (NASDAQ:NICE)
Average Analyst Price Target Upside: 56.83%
Number of Hedge Fund Holders: 29
NICE Ltd. (NASDAQ:NICE) is a provider of cloud platforms for AI-driven digital business solutions. It offers a wide range of digital business tools for diverse sectors such as customer engagement, financial crime prevention, and public safety. It tops our list of best long term tech stocks to invest in now.
The company’s offerings, particularly NICE CXone and NICE Actimize stand out for their ability to improve customer interactions and streamline operations. By integrating advanced analytics and artificial intelligence into its platforms, the company helps organizations across the globe improve both customer experiences and operational efficiencies.
With over 25,000 clients in more than 150 countries, including a substantial number of Fortune 100 companies, the company is clearly establishing a strong market presence. Additionally, NICE (NASDAQ:NICE) has received Buy ratings from 17 analysts. As of September 26, the average price target of $265.00 represents an upside of 56.83% to the stock’s current price.
The strong demand for its cloud solutions is impressive. During the second quarter, the company experienced a surge in cloud revenue, which indicates successful penetration into new markets and an expanding customer base.
The adoption of NICE’s (NASDAQ:NICE) CXone is gaining momentum, largely because it offers a comprehensive solution that effectively integrates AI capabilities. Many organizations are recognizing the necessity of adopting AI to remain competitive, and NICE’s platforms are proving to be essential tools in this transition.
It is evidenced by an increasing number of large deals, including significant contracts with major global players. During Q2, the company announced a seven-digit contract with one of the largest IT firms replacing existing systems with CXone, which points to the platform’s superior capabilities in functional AI.
During the same quarter, a well-known global hotel chain opted for NICE’s solutions to support its digital transformation, which signifies the tangible benefits of using CXone autopilot to accurately interpret consumer intents.
According to Insider Monkey’s database, 29 hedge funds held stakes in NICE (NASDAQ:NICE) in the second quarter, with positions worth $742.727 million. With 1.051 million shares of the company, valued at $180.76 million, RGM Capital is the largest shareholder of the company, as of June 30.
Parnassus Investments stated the following regarding NICE Ltd. (NASDAQ:NICE) in its Q2 2024 investor letter:
“NICE Ltd. (NASDAQ:NICE) reported first-quarter earnings that exceeded consensus estimates. However, the stock fell on news the company’s CEO plans to leave at the end of the year and on concerns that its contact center software would be replaced by generative AI. We believe the concerns are overblown and anticipate instead that the firm will integrate AI features successfully.”
Overall, NICE ranks 1st on our list of the best long term tech stocks to invest in. While we acknowledge the potential of NICE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher 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.
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Disclosure: None. This article is originally published at Insider Monkey.