Shares of Workday slid 6.6% to $135.35 on July 14, erasing a multi-week recovery rally and extending a brutal stretch that has now wiped 46% off the stock in the past year. The sell-off crystallizes a problem that has dogged the enterprise HR-and-finance software maker since February: even when the numbers come in fine, the outlook keeps disappointing.
The Numbers Were Good, but the Forecast Wasn't Good Enough. Workday posted fiscal 2026 total revenues of $9.55 billion and Q4 revenue of $2.53 billion, up roughly 14.5% year-over-year.
In its most recent quarter (fiscal Q1 2027), it beat earnings estimates by $0.15 per share and topped revenue expectations at $2.54 billion. But the fiscal 2027 subscription revenue guide of $9.925–$9.950 billion — roughly $50 million short of the $10 billion consensus — triggered price-target cuts from at least 26 analysts. Growth is decelerating from ~15% to 12–13%, and that trajectory signals the core business is maturing faster than bulls expected.
A Co-Founder Returns, and Wall Street Reads Between the Lines. In February, co-founder Aneel Bhusri returned as CEO, replacing Carl Eschenbach, who had led the company through global expansion and improved operational discipline. The official framing: Bhusri is best suited to steer the AI era. The market's read: abrupt CEO changes paired with softer guidance rarely signal confidence. Analysts cited leadership changes alongside slower bookings and softer margin guidance as reasons for cutting price targets by $40 to over $100 per share.
AI Is the Big Bet, but Revenue Proof Is Still Thin. AI-related expansion deals were nearly 50% larger on average than non-AI deals, and new AI products generated over $100 million in net new annual contract value in Q4 alone. That is promising but small relative to a nearly $10 billion subscription base. Meanwhile, a federal judge allowed a class-action to proceed alleging Workday's AI hiring tools discriminate against disabled applicants — a legal risk that complicates the very product line Bhusri is counting on.
The Valuation Gap Says Somebody Is Wrong. Analysts hold a consensus "Moderate Buy" with an average target around $184 — about 36% above today's price. Yet the stock carries a P/E ratio of roughly 43x and a market cap of $34.3 billion , still a premium for a company whose growth rate is sliding toward the low teens. Workday generated $2.78 billion in free cash flow last year and bought back $2.9 billion of stock , but buybacks alone haven't stemmed the decline. Until Bhusri proves AI can bend the growth curve back upward, investors are pricing the risk that it won't.