If your employer runs on Workday, you know the routine: log in, check a pay stub, request time off, and get out.
Workday wants to change that.
It just introduced Sana, its AI assistant, as the new home screen, so employees can type a request while AI agents handle the clicking.
Wall Street likes the idea but won’t pay up yet. In a note shared with TheStreet before Workday’s Nov. 24 earnings, Bank of America analyst Tal Liani called it a “show me” story.
He reiterated a Neutral rating and a $205 price target. The AI money is real, with AI annual recurring revenue approaching $600 million, according to the note.
Also read: Workday’s axe falls again, and this time it lands on the tech team
The catch is that overall growth keeps slowing. So Liani boiled the report down to two numbers: subscription revenue and 12-month subscription backlog, meaning contracted revenue due within a year.
The backlog number is where the test begins
Backlog shows demand before it becomes revenue. BofA models 12-month backlog growth of 11.5% for the October quarter, slightly below Wall Street’s 12% estimate, according to the note.
That would extend a long cooldown. Backlog grew 14.2% in the July quarter, according to Workday’s second-quarter report, and 17.6% in the year-ago October quarter, the note said.
Subscription revenue should look steadier, up about 12% and in line with the Street, BofA estimates. Only a backlog beat and a firmer fourth-quarter outlook could lift the stock, BofA said, since investors want proof that AI adds growth.
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Workday’s AI is doing more selling than growing
Customers buying Workday’s agents spend about 12% more on average, according to the note. Management also expects AI to drive about 70% of new recurring revenue from existing customers in fiscal 2028.
Yet BofA models subscription growth slowing to 11% that year, from 14.4% in fiscal 2026. AI looks more like a replacement for older sales than a source of fresh ones.
Budgets explain part of it. BofA’s survey of more than 300 tech chiefs found 88% use AI to boost productivity and cut costs.
Yet HR software ranked last on their priority list, at 16%, the survey found. Tools that run IT help desks ranked higher, and BofA wrote that it struggles to see “a differentiated ROI case” for Workday’s AI. Workday faces a second fight, too, over employees’ attention.
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Workday’s new home screen faces a turf war
BofA calls Sana compelling, noting that its Concierge agent targets payroll questions, password resets, and onboarding. The risk is that workers live in Slack or Microsoft Copilot instead.
Workday would then supply the data while another platform owns the user, BofA warned. Workday is leaning in anyway, opening its agents to outside AI tools and charging via Flex Credits.
BofA sees that as standard now, since Salesforce and ServiceNow offer similar access. The note flagged three more points:
- Identity control for AI agents is Workday’s next push. It plans to buy C1.ai, which governs what workers and agents can access, where Microsoft, Okta, and SailPoint already compete.
- A conflict of interest sits inside that deal. BofA Securities is Workday’s financial adviser on the C1.ai acquisition, the note discloses.
- Job cuts are a listed risk. BofA counts bigger-than-expected headcount reductions among the downside risks to its price target.
Those risks help explain Wall Street’s caution. BofA has plenty of company.
Most of Wall Street sits where Bank of America does
Workday runs HR and finance software for more than 11,500 organizations, including over 65% of the Fortune 500, according to its earnings release. That reach makes it a test of whether AI helps or hurts established software.
Shares fell as low as $110.36 over the past year, according to the note. The slide deepened in a February software rout one trader dubbed the “SaaSpocalypse,” Bloomberg reported. The stock has since recovered much of that ground, but conviction hasn’t.
According to StockAnalysis, 42 analysts give Workday a consensus Buy with an average target of $209.25. Still, 20 of them rate it Hold, up from 16 in July and more than the 19 Buy and Strong Buy ratings combined.
Goldman Sachs rates Workday a Hold at $164, while BMO Capital rates it a Buy at $230, StockAnalysis data shows. BofA’s $205 target already values Workday at the high end of software peers on 2027 cash flow, thanks to strong margins.
More upside likely requires faster growth, and software investors have graded harshly, even after strong quarters.
The bigger question reaches beyond Workday. Some analysts warned that AI-driven hiring slowdowns and layoffs could shrink demand for HR software, Reuters reported in February.
If Workday shows on Nov. 24 that its agents bring in new money rather than recycle old money, it hands software a template. If backlog slips again, the “show me” label could follow every software maker selling AI into tight budgets.
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