Workday hits over five-year low as slow sales forecast triggers AI disruption fears
The stock fell 8.3% in early trading and was on track to widen losses of about 40% this year, sparked by concerns that the growing use of artificial-intelligence (AI) tools launched by companies such as Anthropic would corrode demand for traditional software
Workday’s soft sales forecast fuelled investor worries about whether the firm could stay competitive in the AI era, sending its shares plummeting to an over five-year low.
The stock fell 8.3% in early trading and was on track to widen losses of about 40% this year, sparked by concerns that the growing use of artificial-intelligence (AI) tools launched by companies such as Anthropic would corrode demand for traditional software.
This makes Workday one of the worst-performing US software stocks this year. Its CEO and co-founder Aneel Bhusri spent a large chunk of the post-earnings call trying to dispel those worries and touting investments in AI. “Just for what it is worth, Anthropic, Google and OpenAI all run Workday,” Bhusri, who returned as chief executive this month after stepping down as co-CEO in 2024, told analysts. “No amount of vibe coding is going to produce an HR or an ERP system. That kind of complexity is very hard to replicate.”
Still, about 26 analysts, more than half those covering the stock, lowered their price targets after Workday issued a softer-than-expected annual subscription revenue forecast.
The company said some large deals were taking longer to close, particularly in the government and healthcare sectors.
“In an environment where there is increased scrutinization of every metric amidst the AI debates, the guide likely does not allay investors’ general concerns for app layer names,” Piper Sandler analysts said in a note.
Beyond the disruption AI tools can directly pose to Workday, some analysts have said a broader slowdown in hiring and layoffs sparked by the nascent technology could lower overall demand for HR tools.