NICE (NICE) is seeing stronger AI-driven demand, with the Cognigy acquisition providing further growth potential, Oppenheimer said in a note Wednesday.

The investment firm said its November 2024 downgrade reflected slower cloud growth, AI disruption concerns and rising competition from major hyperscalers. Since then, NICE has missed estimates while investing in AI and integrating Cognigy, which the firm views as a positive acquisition.

Oppenheimer said AI is now becoming a tailwind. The company reported record AI bookings in Q2, with nearly every CXone enterprise deal including AI, and about 75% of Cognigy bookings tied to CXone, according to the note.

AI and Self-Service annual recurring revenue reached $362 million, up 52% year-over-year, with AI accounting for 15% of cloud revenue, the firm added.

"COVID headwinds are behind it and AI is improving its service and demand. Hyperscaler/CRM competition is a risk, but migration inertia is high," the firm said.

Oppenheimer upgraded NICE to outperform from perform, and set a price target at $150.

NICE shares were up about 5.5% in Wednesday trading.

Price: 112.63, Change: +5.82, Percent Change: +5.45