Workday's worries persist as results and guidance show 'growth engine is stuck'

[Workday headquarters in Pleasanton, CA, USA]
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Even as Workday's (NASDAQ:WDAY [https://seekingalpha.com/symbol/WDAY]) fiscal second-quarter results and guidance topped estimates, concerns over artificial intelligence and organic growth persist for the back-office software provider, Wall Street analysts said.

Shares fell 5% in premarket trading on Friday, reversing an initial gain.

“While profitability and AI momentum continue to be encouraging positives, a decelerating [current remaining performance obligations] growth rate and an unchanged organic FY25 subscription revenue guide leave open the durability of growth question,” Morgan Stanley analyst Keith Weiss wrote in a note to clients. “While non-GAAP multiples look undemanding, the lack of a floor on growth keeps us [Equal-Weight].”

Weiss, who has a $255 price target on the stock, added that the company's growth rate is looking similar to Salesforce (CRM [https://seekingalpha.com/symbol/CRM]) and ADBE (ADBE [https://seekingalpha.com/symbol/ADBE]): “a seemingly inexpensive non-GAAP EPS multiple (23X CY26) multiple may begin to look more daunting if investors begin to consider stock-based compensation, as the GAAP EPS multiple tops 80X.”

J.P. Morgan analyst Mark Murphy was a tad more positive, but noted there were “puts and takes” on the guidance.

“While FQ2 backlog and P&L results came in above consensus, which is important, we believe investors may be somewhat disheartened guidance was reaffirmed rather than raised in organic terms, as the higher FY26E revenue guidance is driven by the Paradox acquisition and Workday is still 'keeping an eye' on headwinds relating to SLED, a topic we had noted in our preview,” Murphy wrote.

“Overall, despite some puts and takes, we remain constructive on the supportive vectors, including full-suite, partner-led sales, mid-market penetration, and emerging AI momentum, which should manifest into relatively stable growth trends aside ongoing margin progress.”

Jefferies analyst Brent Thill said he saw some concerns about AI, but the company still has a “sticky nature” and there is the potential for margin upside. “While the stock continues to lack a near-term catalyst, we remain Buy-rated due to consistent execution amid increasing uncertainties and a sizable margin opportunity (high 20s lag peers in the low 40s),” Thill wrote in a note.

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* Workday, Inc. (WDAY) Q2 2026 Earnings Conference Call Transcript [https://seekingalpha.com/article/4815833-workday-inc-wday-q2-2025-earnings-conference-call-transcript]
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* Workday raises FY26 subscription revenue guidance to $8.815B while expanding AI suite and partner ecosystem [https://seekingalpha.com/news/4488189-workday-raises-fy26-subscription-revenue-guidance-to-8_815b-while-expanding-ai-suite-and]