Workday Stock Prediction: AI Revenue Hits $500M - Can AI Momentum Drive $250 Next?

TradingKey - The earnings of Workday for the fiscal first quarter of the year 2027 came as a real breath of fresh air for its stock that had been punished all along. This is because the company, headquartered in California, posted very impressive earnings in which the earnings per share reached the impressive mark of $2.66, thus beating the expectations of Wall Street analysts and their estimates of $2.52. Additionally, the revenues of the company went up 13.5% compared to those seen a year ago to reach $2.54 billion, with the subscription revenue – the key metric in the case of SaaS providers – reaching $2.354 billion (growth rate of 14%).

Beat Earnings as a Result of Concerns Regarding Generative AI

To provide you with an overview of what happened previously with Workday, heading into this earning report, the stock had to deal with YTD losses approaching 43%, making it the most hit large-cap software provider in the year 2026. Why was it so? The reason lies in the concerns about the emergence of generative AI that could replace Workday with its products. Indeed, with such innovations available, there would be no point in using services for managing HR or finances when AI would allow doing so much faster and at a much cheaper price.

Earnings Beat Shows These Speculations Were False

And this was demonstrated by the earnings report released recently by the company.

50 Basis Points Margin Raise in the Operating Margin Guided

The most impressive figure, if speaking about the company's earnings for the fiscal quarter, wasn't revenue but rather the margin raise. It should be mentioned that the operating margin was raised to 30.5% from 30% initially forecasted, thus showing a growth of 50 basis points. This figure, if speaking about enterprise software, is critical, as it shows that Workday has discovered how to operate more efficiently.

This is related to the fact that Workday is going to have a stable number of employees during the fiscal year while aiming at increasing the productivity of operations using AI solutions. This is very different from the previous practice of the company, according to which it grew its number of employees together with revenues. Workday believes that it can continue to generate revenues in the range of 12-13% with a stable number of workers and AI assistance. If this plan works out, it would mean a permanent change for Workday.

The free cash flow of Workday for the previous fiscal year reached $2.78 billion, growing 27%. This means that the company can afford to invest in research and development and acquire companies strategically important for it.

AI Solutions Development – Key Driver Behind Workday's Success

Speaking about the main storyline behind Workday earnings release, it should be said that it is related to the company's efforts to develop its AI solutions. Many thought that Workday would use AI just to keep its investors happy and boost the share price. Fortunately, this is not true and here are some numbers to prove it.

So far, the number of clients who implemented one of the Workday solutions amounts to 4,000, which is twice more compared to last quarter. The revenue that the company is generating from the sales of its agentic solutions reaches nearly $500 million. The growth in the new annual contract value is more than 200% and this cannot be considered preliminary figures anymore.

Currently, Workday's product strategy is aimed at developing agentic AI solutions, which is to say systems that can work independently, performing several tasks without any help of people in order to deliver information for decision making. The implementation time of Workday's deployment agent is down by 30% compared to the period prior to implementing these systems and it can decrease to 50% by 2027. Workday launched Sana for IT Service Management, an appropriate solution that will allow leveraging the HR and organizational information available in it to expand its addressable market.

The co-founder of Workday who returned to the office of CEO to replace Carl Eschenbach, Aneel Bhusri, expressed his opinion about it saying that "our business is solid, our AI strategy is working, and we are going at the right speed and in the right direction to lead. His return signals a founder-mode reset – less consensus-building, more velocity."

Stock Market Reaction & Its Future Prospects

It goes without saying that market reacted quite positively to these reports. Namely, Workday's stock soared by 12-14% in after-hours trade. Obviously, investors have realized that Workday would succeed despite the advent of AI. Previously, they believed that the company's competitors would render it useless; however, it appears as though Workday would be riding this new wave with ease.

Actually, the bull thesis in the case of Workday is very simple. Instead of succumbing to the competition from AI products, it has decided to incorporate this technology into its current solutions for managing finances and HR operations of its clients. With such measures, the company is able to count on 4,000 customers who are now implementing Workday-developed agentic AI solutions generating approximately $500 million in annual revenues for the company.

Subscription revenue of the company is estimated to rise by 12-13% while the non-GAAP operating margin is expected to be at the level of 30.5%. The free cash flow is estimated to grow by 15%. Of course, numbers do not look impressive; however, in conjunction with fast adoption of agentic AI solutions, Workday is able to cope with the crisis.

WDAY at $228.14 Surges 5.16% – Daily Breakout Above Blue Ascending Channel

WDAY, trading closed at around $228.14, has jumped 5.16% on the 1D NASDAQ chart, gaining roughly $11 on Friday. The stock has pierced through the upper boundary of its blue ascending channel, alongside breaking previous swing highs at the $222 to $225 levels, providing confirmation that a bullish trend is continuing from the prior base at $199. Price now remains comfortably above the stack of MA50 and MA100 (at $195 and $160, respectively) dynamic support and follows a clear and clean pattern of higher highs/higher lows. The red MA will act as a minor resistance overhead.

WDAY Price Chart - Source: Tradingview

On the candlesticks, we see a strong bullish leg that formed after the formation of the flag-style candlesticks, with no triangle breakdown or bearish engulfing pattern observed. Additionally, the prior price movement of WDAY has cleared the 1.272 Fib extension zone at $237 in a clean fashion. On the bottom RSI 14, at 53.13, we notice a neutral-bullish reading on the indicator and positive divergence from the prior dips, validating the bullish momentum along with further upside potential before reaching an overbought state.

The key resistance level is at $234 to $246 followed by $256 to $264, while the immediate support levels can be found at $222 to $219 and followed by $213. The bullish trade idea is to go long above $230 targeting $246 to $256, with a stop below $222.