WDAY
Still glued into the enterprise stack
BofA Securities just jumped back into the Workday conversation with a Neutral rating and a $140 price target. The core message: Workday isn’t exactly hanging by a thread. It’s deeply embedded in enterprise HR and payroll systems, with BofA saying it serves about 65% of the Fortune 500 and sports a very sticky 97% gross retention rate. That’s the kind of entrenchment that makes ripping it out feel more like changing the plumbing than swapping an app.
The AI catch: fewer seats, less revenue?
Here’s where the plot gets a little annoying for bulls. Workday’s business is largely built on per-seat, per-employee pricing, and AI is great at making companies do more with fewer people. That sounds efficient for customers, but it can also mean fewer paid seats for software vendors. In other words: if AI helps a company flatten headcount, Workday may still be in the building — just collecting a smaller check.
Growth is already cooling
BofA also flagged that Workday’s growth has been slowing for a while, long before the AI panic started making the rounds. The firm said top-line growth has decelerated from roughly 30% to the mid-to-low teens, and it’s modeling revenue growth of 11.5% for fiscal 2027 and 11.3% for fiscal 2028. Add longer enterprise sales cycles and competition from Oracle and SAP, and you get a classic mature-software vibe: solid business, less room for fireworks.
Big picture
The takeaway isn’t that Workday is broken. It’s that the stock may be entering the annoying phase where the product is still essential, but the old monetization playbook starts looking a little dated. If AI keeps pressuring headcount-driven pricing, Workday may need a new way to charge before investors give it a new way to grow.