Workday Earnings: Strong Close to Fiscal 2025, As AI Demand Fuels Backlog Growth

Wide-moat Workday's strong fourth-quarter results beat our expectations for the top and bottom line, driven by continued momentum in its full enterprise resource planning suite and broad-based demand for its artificial intelligence solutions. Workday’s AI strategy continues to gain traction, with significant focus on automation and intelligence through its role-based AI agents that are designed to enhance productivity, automate workflows, and improve decision-making across HR and financial operations. Management indicated that while it has incorporated AI investments into its fiscal 2026 plans, it hasn't built in meaningful revenue uplift from AI offerings just yet. We raise our fair value estimate to $300 per share from $270 on the back of accelerated bookings, and with shares up with results, we continue to view Workday as fairly valued.