Shares of Workday (NASDAQ:WDAY) declined in U.S. premarket trading on Wednesday after the company issued a subscription revenue growth forecast for the current fiscal year that disappointed investors.
The stock has dropped more than 36% since the start of 2026 and is down over 48% compared with a year ago, as markets reassess the long-term growth outlook for enterprise software companies amid rapid developments in artificial intelligence.
The emergence of desktop-based AI agents capable of automating complex computer tasks has sparked wider debate about the future relevance of traditional software applications. AI tools are increasingly able to generate code and automate parts of software development, potentially reducing the cost of producing enterprise-grade applications.
If software development becomes significantly cheaper, increased supply could weaken pricing power and challenge established business models across the sector. These concerns have weighed on high-valuation software stocks, even as companies like Workday continue investing heavily to integrate AI capabilities into their platforms.
Earlier this month, co-founder Aneel Bhusri returned as chief executive, replacing Carl Eschenbach, as the company steps up its focus on artificial intelligence initiatives.
In a research note, Morgan Stanley analysts said Bhusri’s return coincided with “a shift in strategy towards organic innovation,” as Workday seeks to emulate “the focus and speed of a startup, on top of a core of a deterministic system of record containing a hugely valuable set of data.” However, the analysts cautioned that the timeline for returns on AI investments remains uncertain, noting that the development, adoption and monetization of new AI agents could be a “multi-quarter or longer endeavor.”
Workday projected fiscal 2027 subscription revenue in a range of $9.925 billion to $9.950 billion, below market expectations of $10 billion, according to LSEG estimates cited by Reuters. The company expects an adjusted operating margin of around 30.0%.
For the fiscal first quarter ending April 30, Workday forecast subscription revenue of $2.335 billion, representing 13% growth, alongside a non-GAAP operating margin of 30.5%.
In the fourth quarter, earnings reached $2.47 per share, exceeding analyst expectations of $2.32, while revenue rose to $2.53 billion, slightly ahead of forecasts of $2.52 billion.