New York, Feb 25, 2026, 17:53 EST — After-hours
- Workday moved wildly — it hit $117.76 at one point, then ended the session at $133.16. After hours, shares traded lower.
- The company sees its subscription revenue for fiscal 2027 landing between $9.925 billion and $9.950 billion, with a non-GAAP operating margin expected to be roughly 30%.
- Evercore ISI took the stock down a notch, while D.A. Davidson slashed its target to $125, citing uneven demand.
Workday, Inc. (WDAY) shares seesawed Wednesday as the company flagged a more modest outlook for its key subscription unit. The warning sent the stock to a new 52-week low during the session, but buyers picked it up off the floor. By the close, shares were up 2.2% at $133.16. After hours, though, the stock slipped 1.6% to $131.00.
Workday sits right at the crossroads of major corporate budgets for HR and finance systems, so this move carries weight. Investors take Workday’s comments on deal timing and renewals as a direct signal—what does it say about how companies are thinking about hiring, payroll outlays, and back-office tech upgrades?
This week, that read-through is colliding with a broader debate: are “AI agents” set to drive a whole new stream of add-on sales, or are they about to become just another costly line item that eats into margins while buyers hesitate? Workday’s outlook drops into a market already on edge, with investors sorting out which software names have the staying power as AI rolls through the sector.
Earlier, Workday shares tumbled to lows not seen in over five years, as doubts swirled about AI’s impact on demand for its core HR and payroll software—and concerns mounted over sluggish deal-making with big government and healthcare clients. The stock has shed roughly 40% in 2026. Pressure isn’t limited to Workday; the whole U.S. application software sector has felt the squeeze.
Workday late Tuesday projected fiscal 2027 subscription revenue between $9.925 billion and $9.950 billion, targeting a non-GAAP operating margin close to 30%. The company expects first-quarter subscription revenue to reach $2.335 billion. CEO Aneel Bhusri put it this way: “AI gives us the chance to do it all again.” CFO Zane Rowe emphasized their focus, saying the company is “prioritizing investment in our agentic AI roadmap.” Workday Investor Relations
Subscription revenue—essentially the regular payments customers make for Workday’s cloud software—drives most of the company’s business. Backlog, on the other hand, tracks those subscription deals that have been inked but haven’t hit the revenue line yet. Non-GAAP numbers leave out certain charges, like stock-based compensation. The term “agentic AI” gets tossed around to describe software agents that actually execute tasks for users.
Evercore ISI’s Kirk Materne lowered his rating on Workday to “In Line,” slashing the price target to $160 from $200. He called it “hard to see” the story change “in the immediate near-term,” and said adoption of the agent strategy will only be “believing” once customers start to actually use it. Streetinsider
D.A. Davidson’s Lucky Schreiner cut his price target for the stock in half, down to $125, and stuck with a Neutral rating. “Net new demand trends are volatile,” Schreiner said, adding the firm plans to wait it out “until organic demand show signs of stabilization.” TipRanks
Thursday’s session looks set for a test: will that after-hours slump worsen at the open, or does the bounce from the $117.76 intraday low stick? Even if the broader market finds its footing, a flurry of price target cuts following the guidance may keep things turbulent on the tape.
Here’s the crux: If big deals don’t just get delayed but actually fall apart, subscription growth could drop under the freshly set range. There’s also the matter of rising AI costs—if clients drag their feet on paying up for the new AI offerings, margins might take yet another hit.
Workday’s first-quarter numbers, covering the stretch through April 30, are up next as the key catalyst. Investors want more clarity this time—specifically, on deal closures, how subscription growth is holding up, and if AI offerings are starting to drive actual booked revenue instead of just hype.
