Workday shares tumble on dour revenue forecast amid AI threat

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Workday, a leading provider of HR and payroll software, saw its shares fall around 10% in premarket trading on Wednesday after the company forecast lower-than-expected subscription revenue for fiscal year 2027. The company cited broader macroeconomic uncertainty and elongated sales cycles, especially in sectors like government, education, and healthcare, as factors behind the weaker outlook. Workday's co-founder Aneel Bhusri, who recently returned as CEO, downplayed the threat of AI displacing traditional enterprise software during the earnings call.

Why it matters

Workday's revenue forecast miss and stock decline reflect broader concerns in the enterprise software industry about the potential impact of AI automation on traditional software vendors. As AI tools become more advanced, investors are scrutinizing the ability of legacy software companies to adapt and maintain their revenue streams.

The details

Workday forecast subscription revenue between $9.93 billion and $9.95 billion for fiscal year 2027, falling short of the roughly $10 billion analysts were expecting. The company said it would prioritize additional spending on its "agentic AI" roadmap in response to the AI threat. Workday also cited elongated sales cycles, especially in government, education, healthcare and parts of the commercial market, as delaying some large enterprise deals, though most remain active.

• Workday shares fell about 10% in premarket trading on Wednesday, February 25, 2026.
• Workday's fiscal year 2027 subscription revenue forecast was issued on February 25, 2026.

What’s next

Workday's management team will likely need to provide more details on its AI strategy and how it plans to adapt to the changing competitive landscape during future earnings calls and investor events.