Workday Earnings: Strong Results Show Long Runway for AI and Cloud; Maintain $245 Valuation

Wide-moat Workday posted stellar third-quarter results which exceeded our top- and bottom-line GAAP expectations. We are maintaining our $245 fair value estimate, as our long-term projections remain largely unchanged. Shares popped 7% based upon the results and guidance, and we view shares as fairly valued after the recent run-up in technology stocks. We reiterate our belief that Workday will likely surpass SAP in global enterprise resource planning market share in a decade, with the expansion in AI use-cases and a robust opportunity in its cloud platform providing evidence of the firm’s runway for growth.