Workday (WDAY) shares closed Friday at $146.19, up 12.45%, marking the stock's largest single-day gain of the week. The stock ended the holiday-shortened week roughly 14% higher than the prior Friday, as investors reassessed risks from artificial intelligence and returned to software names.
The jump came after Workday reported fiscal first-quarter revenue of $2.542 billion, up 13.5% year-over-year, with subscription revenue rising 14.3% to $2.354 billion. Adjusted earnings per share came in at $2.66, beating analyst expectations of $2.51, according to Reuters data. The company also raised its non-GAAP operating margin target to 30.5%, signaling improved profitability.
Workday's stock had been under pressure earlier this year as Wall Street debated whether AI agents—software that can act autonomously on prompts—would reduce demand for traditional subscription-based business applications in HR, payroll, and finance. Friday's rally suggests investors are now betting that AI will instead expand Workday's addressable market.
CEO Aneel Bhusri said the company is "ready for this AI moment," while CFO Zane Rowe maintained fiscal 2027 subscription revenue guidance at $9.925 billion to $9.950 billion. The company also announced an expanded partnership with Google Cloud on May 28, integrating Workday's Sana Self-Service Agent with Gemini Enterprise and making Gemini the default AI model in Sana.
Workday also rolled out Adaptive Decision Intelligence on May 27, a new AI tool for its Adaptive Planning suite that allows finance teams to ask questions in plain English and run scenarios directly within their existing plans. Ben Pierce, general manager for Workday Adaptive Planning, said the feature aims to reduce "hours of manual data work."
The broader software sector also rallied, with Snowflake jumping over 33% on Thursday after lifting its outlook and announcing a $6 billion deal with Amazon Web Services. Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted the moves show "how quickly sentiment can turn" when AI drives real revenue.
Despite the gains, risks remain. Workday left its annual subscription revenue outlook unchanged, so the stock's bounce depends on whether buyers believe AI will lift sales rather than push down per-seat pricing. If spending slows or AI from OpenAI, Anthropic, or major cloud firms chips away at demand for HR and finance software, Friday's move could prove short-lived.
Workday's DevCon conference runs June 1-4 in Las Vegas, where investors will look for product updates, partner traction, and customer use cases. The company is positioning the event as an agent-building conference for developers, and analysts will be closely watching for signs of differentiation against competitors like ServiceNow, Salesforce, and major cloud providers.
The S&P 500 ended Friday up 0.22%, the Nasdaq Composite added 0.20%, and the Dow climbed 0.72%, according to market data from LSEG.
