Nice (NICE) is expected to benefit from AI adoption in the Contact Center as a Service market, supporting future cloud revenue growth and profitability, Morgan Stanley said in a note Friday.

A "favorable" setup is expected ahead of Nice's October Capital Markets Day in New York, where the company's management will share updated medium-term financial targets and provide more details on its Cognigy acquisition, which is scheduled to close in Q4, the investment firm said.

Large AI deals and new partnerships with Salesforce (CRM), ServiceNow (NOW), and Snowflake (SNOW) are expected to contribute to growth through fiscal 2026, the analysts said.

Nice reported Q2 cloud growth of 12.3% year-over-year, showing stabilization and meeting expectations, despite concerns around the underperforming LiveVox asset, according to the note.

Q2 AI and self-service annual recurring revenue (ARR) rose 42% year over year to $238 million, up from 39% in Q1, with several large AI wins contributing, Morgan Stanley said.

Management reaffirmed full-year 2025 cloud growth of 12%, showing confidence despite Q4 seasonality, according to the note.

Morgan Stanley maintained an overweight rating on the stock and lowered its price target to $193 from $202.

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