Workday (WDAY) AI Stock Analysis

• Market Cap: $34.25B
• Dividend Yield: N/A
• Average Volume (3M): 4.69M
• Price to Earnings (P/E): 51.5
• Beta (1Y): 1.08
• Revenue Growth: 13.35%
• EPS Growth: -60.76%
• Country: US
• Employees: 20,482
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 2.47
• Shares Outstanding: 213,000,000
• 10 Day Avg. Volume: 5,011,931
• 30 Day Avg. Volume: 4,692,619
• PEG Ratio: 2.11
• Price to Book (P/B): 5.88
• Price to Sales (P/S): 4.80
• P/FCF Ratio: 16.52
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 3.67
• Enterprise Value/Gross Profit: 4.85
• Enterprise Value/Ebitda: 24.29
• 1Y Price Target: $186.55
• Price Target Upside: 39.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 32
• EPS Forecast (FY): 10.71
• Revenue Forecast (FY): $10.72B

• Rating: 66 Neutral
• Price Target: $141.00 ▲(5.41% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is primarily supported by strong financial fundamentals (especially free cash flow strength and improved balance sheet) and a constructive earnings outlook around AI traction and retention. This is meaningfully offset by very weak technical momentum (price far below key moving averages with negative MACD) and a high valuation multiple without a dividend yield.

Positive Factors

Strong free cash flow

Sustained, large free cash flow provides durable financial flexibility: supports continued AI R&D, share repurchases ($2.9B repurchased), and capacity to fund M&A or cushion slower quarters. High FCF relative to net income (~0.94) indicates earnings quality and funding independence.

Material deleveraging & strong balance sheet

Marked reduction in leverage and sizable equity provide long-term resilience against cyclical shocks, lower interest expense risk, and capacity to invest in product development or absorb strategic hires. A robust balance sheet supports multi-year AI investments without jeopardizing liquidity.

AI traction and high retention

Organic AI product adoption, demonstrated ARR and high retention underpin durable competitive advantage: role-based agents, Sana GA and 1.7B AI actions drive stickiness and upsell potential. Engineering productivity gains accelerate feature delivery and extend moat over competitors.

Negative Factors

Modest, uneven net margins

Despite improved gross margins, modest and historically uneven net margins limit free earnings reinvestment and make profitability sensitive to investments or large deal timing. Persistently low net margins reduce buffer for slower revenue periods and constrain ROE expansion.

Near-term growth tradeoff for AI investment

Management's deliberate prioritization of AI spend and associated margin tradeoffs create a structural near-term growth slowdown versus prior trends. This tradeoff may compress short-term profitability and requires successful execution over multiple quarters to translate investments into sustained revenue acceleration.

Elongated enterprise deal cycles

Longer sales cycles and falling average contract durations reduce revenue visibility and make backlog realization lumpy. Combined with timing lags for consumption-based AI monetization, this structural elongation risks uneven subscription trends and complicates forecasting and margin planning over coming quarters.

Workday Business Overview & Revenue Model

Company Description

Workday, Inc. provides enterprise cloud applications in the United States and internationally. The company's applications help its customers to plan, execute, analyze, and extend to other applications and environments, and to manage their business and operations. It offers a suite of financial management applications, which enable chief financial officers to maintain accounting information in the general ledger; manage financial processes; identify real-time financial, operational, and management insights; enhance financial consolidation; reduce time-to-close; promote internal control and auditability; and achieve consistency across finance operations. The company also provides cloud spend management solutions that helps organizations to streamline supplier selection and contracts, manage indirect spend, and build and execute sourcing events, such as requests for proposals; Human Capital Management (HCM) solution, a suite of human capital management applications that allows organizations to manage the entire employee lifecycle from recruitment to retirement, and enables HR teams to hire, onboard, pay, develop, reskill, and provide employee experiences; Workday applications for planning; and applications for analytics and reporting, including augmented analytics to surface insights to the line of business in simple-to-understand stories, machine learning to drive efficiency and automation, and benchmarks to compare performance against other companies. It serves professional and business services, financial services, healthcare, education, government, technology, media, retail, and hospitality industries. The company was formerly known as North Tahoe Power Tools, Inc. and changed its name to Workday, Inc. in July 2005. Workday, Inc. was incorporated in 2005 and is headquartered in Pleasanton, California.

How the Company Makes Money

Workday generates revenue primarily through subscription fees for its cloud-based software solutions. Customers typically pay on a subscription basis, which can include annual fees based on the number of users or a flat rate depending on the services utilized. Key revenue streams include Human Capital Management (HCM) and Financial Management solutions, both of which have shown strong growth as organizations increasingly transition to cloud-based systems. Additionally, Workday offers professional services, such as implementation and consulting, which contribute to its earnings. The company has formed significant partnerships with various organizations, enhancing its market reach and integration capabilities, thus driving customer adoption and retention. Factors contributing to its earnings include a strong focus on customer satisfaction, continuous product innovation, and a growing demand for cloud-based enterprise solutions.

Workday Financial Statement Overview

Summary

Strong and improving fundamentals supported by robust cash generation (FCF ~$2.78B in 2026 with sharp YoY growth), significantly reduced leverage (debt down to ~$0.83B; debt-to-equity ~0.11), and improved gross margin (~88%). The main constraint is earnings volatility and still-modest net margin (~7% in 2026), indicating profitability durability is not yet fully established.

Income Statement

Revenue growth is strong in the latest year (2026 annual: 365% vs. mid-teens growth in prior years), and gross margin improved materially (to ~88% from ~72–76%). Profitability has also stabilized after earlier losses (net income positive in 2024–2026 vs. losses in 2021 and 2023). Offsetting this, net margin remains modest (~7% in 2026 vs. ~19% in 2024) and earnings have been volatile year-to-year, indicating profitability is not yet consistently durable.

Balance Sheet

Leverage has improved significantly, with total debt dropping to ~$0.83B in 2026 from ~$3.30–$3.36B in 2024–2025, driving debt-to-equity down to ~0.11 (from ~0.37–0.58 historically). Equity remains sizable (~$7.8B) against ~$18.1B in assets, supporting balance-sheet resilience. The main watch-out is that returns on equity are positive but not exceptional (~8.9% in 2026) and have been uneven historically (including negative periods).

Cash Flow

Cash generation is a clear strength: operating cash flow rose to ~$2.94B and free cash flow to ~$2.78B in 2026, with free cash flow growth of ~743% year-over-year. Free cash flow closely tracks reported earnings (free cash flow to net income ~0.94 in 2026, ~0.78–0.89 in prior years), suggesting solid earnings quality. A mild concern is that operating cash flow growth has not been smooth historically (including a free cash flow decline in 2023), but the overall trajectory is positive.

Breakdown	Jan 2026	Jan 2025	Jan 2024	Jan 2023	Jan 2022
Income Statement
Total Revenue	9.55B	8.45B	7.26B	6.22B	5.14B
Gross Profit	7.23B	6.38B	5.49B	4.51B	3.71B
EBITDA	1.36B	1.08B	752.00M	206.00M	377.00M
Net Income	693.00M	526.00M	1.38B	-367.00M	29.00M
Balance Sheet
Total Assets	18.07B	17.98B	16.45B	13.49B	10.50B
Cash, Cash Equivalents and Short-Term Investments	5.44B	8.02B	7.81B	6.12B	3.64B
Total Debt	834.00M	3.36B	3.30B	3.25B	2.10B
Total Liabilities	10.27B	8.94B	8.37B	7.90B	5.96B
Stockholders Equity	7.80B	9.03B	8.08B	5.59B	4.54B
Cash Flow
Free Cash Flow	2.78B	2.19B	1.91B	1.30B	1.38B
Operating Cash Flow	2.94B	2.46B	2.15B	1.66B	1.65B
Investing Cash Flow	333.00M	-1.78B	-1.75B	-2.51B	-1.61B
Financing Cash Flow	-3.32B	-1.15B	-268.00M	1.20B	110.25M

Workday Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 133.76
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDAY, the sentiment is Negative. The current price of 133.76 is below the 20-day moving average (MA) of 150.64, below the 50-day MA of 183.29, and below the 200-day MA of 222.20, indicating a bearish trend. The MACD of -14.78 indicates Negative momentum. The RSI at 31.71 is Neutral, neither overbought nor oversold. The STOCH value of 46.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WDAY.

Workday Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	70 Outperform	$6.48B	14.77	27.42%	0.94%	9.72%	-2.69%
WDAY	66 Neutral	$34.25B	51.54	8.23%	―	13.35%	-60.76%
DDOG	65 Neutral	$36.83B	372.48	3.34%	―	26.63%	-46.13%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
SNOW	60 Neutral	$55.11B	-41.93	-54.09%	―	28.48%	-19.12%
TEAM	56 Neutral	$18.84B	-101.74	-13.47%	―	19.51%	53.35%
BL	53 Neutral	$1.93B	85.02	6.29%	―	7.36%	-40.62%

Workday Corporate Events

Workday Reinstates Co-Founder Aneel Bhusri as CEO

On February 6, 2026, Workday’s board appointed co-founder and executive chair Aneel Bhusri as chief executive officer, returning him to the role he previously held for multiple terms since 2009 and keeping him on as chair. The move coincided with the departure of Carl Eschenbach as CEO and director, though he will remain a strategic adviser, and cements Bhusri’s influence alongside co-founder David Duffield, with their stock voting agreement controlling about 68% of Workday’s voting power.

Bhusri’s new compensation package includes a $1.25 million base salary, a target bonus of up to 200% of salary starting in fiscal 2027, and equity awards valued at $135 million in time-based and performance-based RSUs tied in part to stock-price targets over a five-year period. Eschenbach’s separation agreement provides a lump-sum payment of roughly $3.6 million and accelerated vesting of significant equity, as Workday frames the leadership change as a pivot to lead the “AI era” and simultaneously reassures investors by reaffirming that its fiscal 2026 fourth-quarter and full-year results remain in line with prior guidance.

The most recent analyst rating on (WDAY) stock is a Buy with a $275.00 price target. To see the full list of analyst forecasts on Workday stock, see the WDAY Stock Forecast page.

Workday Announces Workforce Restructuring and Related Impairment Charges

On February 4, 2026, Workday detailed plans to trim roughly 2% of its workforce—mainly non-revenue roles in Global Customer Operations—while continuing targeted hiring across strategic, revenue-generating areas, signaling a pivot toward higher-priority initiatives for fiscal 2027. The restructuring will trigger about $135 million in fourth-quarter fiscal 2026 charges, including cash severance and benefits plus significant non-cash impairments tied to office space and long-lived assets, with completion expected by early fiscal 2027 pending local requirements.

The most recent analyst rating on (WDAY) stock is a Hold with a $200.00 price target. To see the full list of analyst forecasts on Workday stock, see the WDAY Stock Forecast page.