Workday's stock plummeted 6.62% during intraday trading on Tuesday, extending significant losses from the pre-market session.

The sharp decline followed BofA Securities reinstating coverage of the company with a Neutral rating and a $140 price target, which was notably below the stock's trading level. The brokerage highlighted value compression risks tied to Workday's seat-based monetization model, citing pressures from enterprise headcount rationalization and the disruptive potential of AI agent-based pricing. BofA noted that while Workday remains resilient, it is increasingly in a position of defending market share rather than gaining it, with limited near-term catalysts for growth.

The selloff coincided with broad weakness across the application software sector, indicating sector-wide concerns impacting investor sentiment. A market rotation was also observed, with funds flowing out of software stocks and into chipmakers and server companies amid the ongoing AI infrastructure build-out, further pressuring Workday and its peers.