Stocks can see their prices fall for lots of reasons, and not all of them should scare away investors. Increased competition, a changing market, shifting sentiment and tough macroeconomic conditions can push shares down, even as the company remains fundamentally sound. And a fundamentally sound stock on a dip is frequently seen as an opportunity for investors.
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The challenge lies in distinguishing between short-term declines and deeper structural problems. That’s not a simple task, but investors can draw on the insights of Wall Street’s professional analysts, who apply their experience and research to separate genuine risks from potential opportunities.
Lately, some of those analysts have been pointing to a pair of underperforming cloud software stocks as attractive buys. In their view, these names are not showing signs of weakness but are examples of temporary setbacks with long-term promise. To dig into their reasoning, we’ve turned to the TipRanks database for a closer look at the stocks they’ve spotlighted. Here are the details.
Workday (WDAY)
The first stock on our list here, Workday, offers its customers an AI-powered, cloud-based platform to manage many of the basic back-office functions of enterprise-scale businesses, including HR, finance, and customer contact agents. The company’s software solutions facilitate the business workflow, tracking employees, their work, the legal supports, and even IT, all so that the business can advance. Workday boasts more than 11,000 business clients, ranging from mid-sized firms to denizens of the Fortune 500.
The company’s Illuminate platform, its chief software product, is designed to allow human users to collaborate with the AI, providing active support for the company workforce to generate its best work. The company can claim a large suite of top-level enterprise customers, including such names as GE, Best Western, Visa, and Snowflake.
Workday’s software is designed to be flexible, and it has found application with a wide range of industries. The company has users in healthcare, financial services, professional and public services, manufacturing, and technology; in all, the company has operations across a varied array of fields in over 175 countries.
AI and cloud software, particularly in the business realm, are a growth industry; AI especially has been fueling the general rally that we’ve seen in the markets recently. Workday, however, has been facing some headwinds, and the stock is down 9.5% for the year-to-date.
In May of this year, the shares fell sharply when the company issued disappointing full-year guidance at a time when the macro environment, particularly the prospect for future IT spending, was uncertain. More recently, the company’s fiscal 2Q26 results included a cautious Q3 guide.
Looking at the company’s last earnings report, from fiscal 2Q26, we note that Workday’s top line revenue came to $2.35 billion. This was up 13% year-over-year, and beat the forecast by $10 million. At the bottom line, the company’s non-GAAP EPS figure of $2.21 was 9 cents per share higher than expected. The company issued full-year guidance for fiscal 2026 subscription revenues of $8.815 billion. This represents a y/y gain of 14%, lower than the 16% revenue gain the company realized in fiscal 2025.
This stock has caught the eye of Guggenheim analyst John DiFucci, who notes Workday’s headwinds but sees the company’s growth and potential for further growth as more significant. He writes, “WDAY’s traditional core business is usually part of large transformational HCM projects that cost millions of dollars and often take years to complete, and those projects are a low priority in today’s IT spending environment. It’s not that the spending environment is horrible, but it is subpar per our extensive field work and analysis. When the environment improves (though the timing of that is uncertain), we believe WDAY will be well-positioned to accelerate growth, as it is a better company than it was just a few years ago. It has engaged more intimately with partners, is expanding internationally, has had some success going down-market, and has acquired new human talent and technology that has fueled growth and should continue to… WDAY is growing double digits and will likely continue to for the foreseeable future even if the environment remains relatively stagnant.”
DiFucci follows up this stance with a Buy rating, and a $285 price target that points toward a one-year upside potential of 22%. (To watch DiFucci’s track record, click here)
There are 29 recent analyst reviews on record for WDAY shares, including 22 to Buy and 7 to Hold, all coalescing to a Strong Buy consensus rating. The stock is currently trading for $233.50 and its $281.42 average target price implies a gain of 20.5% in the next 12 months. (See WDAY stock forecast)
Salesforce (CRM)
The next stock on our list is Salesforce, one of the best-known names in the field of CRM (customer resource management) cloud software services. Salesforce is a $230 billion giant in the field, and generated nearly $38 billion in revenue in its fiscal year 2025, which ended this past January. The company was founded in 1999, and is known as a survivor of the dot-com bubble.
Salesforce’s core business is CRM, providing the software that its enterprise customers use to manage and improve their customer relationships. The company’s software tools are cloud-based, and optimized to manage data, marketing, online commerce, sales, and customer service. Salesforce has a reputation for quality, based on more than 25 years of success, and in recent years the company has been adding AI to the mix of its tools.
The company’s new Agentforce suite is an AI-powered platform that brings autonomous digital agents into play to create a 24/7 digital workforce, capable of working alongside human agents – or on its own – to provide action and support for a limitless customer-facing service force.
In a related move that we should watch closely, Salesforce announced this past May that it has entered into a ‘definitive agreement’ to acquire the AI cloud data management firm Informatica (INFA). The acquisition will bring Informatica’s AI-powered data services under Salesforce’s umbrella, enhancing the CRM company’s ability to produce agentic AI. The transaction, worth $8 billion, will be conducted in cash and stock.
Even though Salesforce holds a strong position in the CRM field, with an enviable reputation, the company’s stock is down 27% this year. The decline in share price reflects a combination of difficulties that Salesforce faces as it moves to expand its AI capabilities. The transformation itself is difficult to implement, and it is unclear for now just how much of a premium customers are willing to pay for access to AI tools. In addition, and perhaps more importantly, Salesforce’s move into AI brings it into increasing competition with the AI industry’s mega-caps, such as Microsoft. It remains to be seen how Salesforce will compete at that scale.
Nevertheless, Mizuho analyst Gregg Moskowitz believes that Salesforce can overcome its current stressors, and sees plenty of room for the company to execute on growth going forward. He writes, “While still clearly very early days, and many investors expect CRM will be meaningfully disrupted by AI, we believe Agentforce represents an intriguing upside lever to the model over time, in that it should enable CRM to much more effectively monetize its platform, help facilitate better cross-sell and upsell opportunities, and improve platform stickiness. With respect to operating margins, while investors have become more constructive here, we don’t believe our view that CRM’s management team possesses an increased level of discipline has been fully embraced. Relatedly, while some investors are concerned about a return to larger M&A, we believe the proposed INFA deal represents a measured, strategic move for CRM, with meaningful potential synergies.”
Moskowitz goes on to rate CRM shares as Outperform (i.e., Buy), and he sets a $350 price target that implies a one-year gain of 43% lying ahead for the stock. (To watch Moskowitz’s track record, click here)
This major software player holds a Strong Buy consensus rating from the Street’s analysts, based on 40 reviews that break down to 31 Buys, 8 Holds, and 1 Sell. The shares are priced at $244.28 and their average target price, $332.42, suggests a 12-month upside of 36%. (See CRM stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.