Workday (WDAY) is accelerating its artificial intelligence (AI) push, coming off a strong second-quarter performance marked by double-digit revenue growth and a surging backlog. The company is doubling down on innovation with the acquisition of Flowise, enabling it to provide customers with the tools to quickly build and deploy tailored AI agents for HR and finance. Additionally, the firm’s landmark deal for Paradox’s conversational AI is set to revolutionize frontline hiring.
At the same time, sentiment around AI adoption is shifting, as nearly 75% of workers say they’re comfortable teaming up with AI agents as collaborators. With both technological momentum and cultural readiness aligning, analysts believe WDAY stock has the potential to soar by as much as 50%.
Workday is a leading enterprise software company headquartered in Pleasanton, California, specializing in cloud-based financial management and human capital management solutions with an expanding presence across global markets. Its market capitalization is around $61 billion, reflecting its stature as a prominent large-cap SaaS vendor.
Workday’s stock has had a notably choppy performance in 2025. While the company delivered a strong Q2 performance, the market responded tepidly to cautiously soft Q3 guidance, resulting in a drop after the earnings release. On a year-to-date (YTD) basis, Workday shares have declined 11%, reflecting broader investor concern over AI-related pressures and subscription growth dynamics.
There is growing anxiety that AI could erode Workday’s traditional model. While the company is aggressively integrating AI through acquisitions like Paradox and its development of AI agents, market concerns persist about slower adoption rates and long-term disruption risks.
WDAY stock has also slumped 4% over the past month and remains 22% below its 52-week high of $294.
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While the stock is currently trading at 63 times forward earnings — a premium compared to its peers despite the selloff — it is currently trading below its own historical average.
Workday released its fiscal Q2 2026 results on Aug. 21, reporting total revenue of $2.4 billion, a 12.6% year-over-year (YOY) increase and higher than the consensus estimate, while subscription revenue rose 14% YOY to $2.2 billion.
Profitability also improved significantly with non-GAAP operating income surging to $680 million, or 29% of revenue. Net income climbed 73% YOY to $228 million, translating to a non-GAAP EPS of $2.21, well above last year’s $1.75 and above analysts’ expectations. The 12-month subscription backlog grew 16.4% to $7.9 billion, reinforcing future revenue visibility.
Workday is advancing its AI strategy with two significant acquisitions of Flowise and Paradox, a conversational AI recruitment agent, both aimed at accelerating its AI-led talent acquisition solutions.
The company has also been expanding its ecosystem, launching the Workday Agent Partner Network, unveiling Workday Government, strengthening its Indian presence with a local data center and leadership appointments, and securing new customers like Banamex and Carrefour while expanding ties with Alphabet (GOOGL) and Qantas.
Further, Workday updated its full-year fiscal 2026 subscription revenue guidance to $8.8 billion (14.2% growth) and non-GAAP operating margin guidance to 29%. However, the company set Q3 subscription expectations at $2.2 billion, representing growth of 14.1% and a 28% non-GAAP operating margin.
Analysts remain optimistic, as they predict EPS to be around $3.52 for the current fiscal year, up 108% YOY, before surging by another 36.4% annually to $4.80 in the next fiscal year.
Workday has started to attract renewed attention from analysts. On Aug. 22, TD Cowen reiterated its “Buy” rating on Workday with a $310 price target, praising the company’s latest earnings as a “clean print” that showed a return to strong cRPO growth. The firm highlighted growing AI traction, the Paradox acquisition, and stable macro trends outside the SLED sector.
RBC Capital also reaffirmed its “Outperform” rating and $340 price target on Workday after its Q2 report, noting strong upside potential, and citing early AI adoption and growing momentum in Workday’s partner ecosystem.
On the other hand, some analysts have largely trimmed expectations on WDAY stock despite generally maintaining favorable ratings. KeyBanc cut its price target on Workday to $285 from $325 but kept an “Overweight” rating, citing uncertainty around the company’s near- to mid-term growth outlook despite a strong Q2 beat.
Bernstein lowered its price target on Workday to $304 from $325 as well, but kept an “Outperform” rating, as the firm characterized the recent company guidance as “unimpressive.”
Overall, WDAY stock has a consensus “Moderate Buy” rating. Of the 38 analysts covering the stock, 24 advise a “Strong Buy,” three suggest a “Moderate Buy,” 10 analysts are on the sidelines with a “Hold” rating, and one has a “Strong Sell” rating.
The average analyst price target for WDAY is $279.86, indicating a potential upside of 22%. The Street-high target price of $340 suggests that the stock could rally as much as 49%.
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On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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