Workday Shares Plummet Amid AI Era Competition Fears
Workday shares dropped significantly due to a disappointing sales forecast, raising investor concerns about its competitiveness in the AI-driven market. CEO Aneel Bhusri emphasized AI investments to counter these worries. Analysts reduced price targets amid concerns over slower deal closures in the government and healthcare sectors.
On Wednesday, shares of Workday continued to tumble following the company's less-than-stellar sales forecast, which stoked investor fears about the HR and payroll software company's ability to compete during the AI boom. The stock's value dropped by 9% in premarket trading, further compounding this year's 40% loss amid concerns that AI advancements could eclipse traditional software demand.
Despite being one of 2023's poorest performers in the U.S. software market, CEO Aneel Bhusri sought to reassure investors during a post-earnings call by highlighting Workday's AI investments. He noted that major AI players like Anthropic, Google, and OpenAI utilize Workday. Nevertheless, about 23 analysts lowered their price targets following the company's subdued annual subscription revenue outlook.
The company attributed some delays in closing significant deals, particularly within the government and healthcare sectors, to heightened scrutiny of metrics against the backdrop of AI discussions. Analysts have warned that not only direct disruptions from AI could affect Workday, but also a broader slowdown in hiring could decrease the demand for HR tools.
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