Workday Stock Price Implosion: An Automatic Buy for AI Investors

Core Insights - Workday's recent stock price drop is viewed as a buying opportunity for AI investors, driven by a conservative guidance that suggests sustained double-digit growth, which is likely to be exceeded based on historical performance [1][9] - The company has consistently outperformed consensus estimates for both revenue and earnings since 2020, with a 99.5% success rate [1] - Despite a weak Q2 outlook, the company reaffirmed its 2025 guidance, indicating potential for substantial outperformance due to strong backlog growth and increased subscription revenue [9][10] Financial Performance - In Q1, Workday's core subscription business grew by 13.4%, leading to a 12.6% increase in total revenue, surpassing MarketBeat's consensus by 100 basis points [6] - Adjusted profit rose by 31% and adjusted earnings by 28%, exceeding consensus by 1100 basis points, while cash flow increased by 22% and free cash flow by 44% [8] - The company reported a 15.6% increase in long-term subscription backlog and a 19% increase in total subscription backlog, indicating strong future revenue potential [9] Market Position and Analyst Sentiment - Workday's stock is currently rated as a Moderate Buy, with a 12-month price forecast of $293.54, suggesting a 23.33$238.01 [7] - Institutional ownership is around 90%, and while buying activity slowed in Q2, the recent price drop may attract institutional investors back into the market [11] - Analysts have revised price targets downward post-Q2 release, but the average target remains at $290, indicating potential for recovery [3][4]