Workday (NASDAQ:WDAY) shares slumped approximately 10% in premarket trading Wednesday after the enterprise software maker issued a downbeat revenue forecast, citing a pullback in corporate spending amid macroeconomic uncertainty.
The decline extends a painful year for the Pleasanton, California-based company, which has seen its stock tumble roughly 40% in 2026 amid a wider sector sell-off triggered by fears that generative AI startups are beginning to disrupt traditional software incumbents.
The company projected subscription revenue for fiscal year 2027 between $9.93 billion and $9.95 billion, falling short of the $10 billion consensus estimate.
The guidance comes as investors weigh the impact of new enterprise tools from AI firms like Anthropic, which some analysts fear could squeeze the revenue streams of legacy "app layer" vendors by automating tasks once handled by traditional HR and payroll platforms.
In response to the shifting landscape, Workday announced it would prioritize capital allocation toward its "agentic AI" roadmap.
The quarterly results highlighted "elongated sales cycles," particularly within the government, education, and healthcare sectors.
Workday noted that while most delayed enterprise deals remain active—with some already closing early in the first quarter—the sluggish conversion rate has weighed on short-term projections.
The earnings report marks a critical juncture for co-founder Aneel Bhusri, who returned as CEO earlier this month after previously stepping down from the role in 2024.
On a conference call with analysts, Bhusri pushed back against the narrative that AI will displace established software vendors, arguing instead that Workday’s deep integration into corporate workflows provides a defensive moat.
Workday’s valuation currently reflects this investor skepticism; the stock is trading at a 12-month forward price-to-earnings multiple of 11.94, a discount compared to industry peer Salesforce’s 13.98.