By Adam Levine

Workday reports fourth-quarter earnings Tuesday afternoon amid a crash in software stocks and predictions that artificial intelligence will bring its imminent demise.

For this quarter at least, Wall Street analysts still see mid-teens sales growth backed by strong free cash flow. Adjusted earnings per share are projected at $2.32, up from $1.92 last year. Revenue is expected to grow by 14% to $2.5 billion.

Workday stock was down over 50% during the past year, while the S&P 500 rose by 15%. The swoon accelerated in January with the release of desktop agent software that can automate complex tasks on a computer, making investors rethink the role of software in the coming years.

AI can write software with blazing speed, and coding agents can automate large portions of the application development process. If that dramatically brings down the cost of making production-ready software, there is likely to be more software, devaluing the roles these applications play today. Current business models may not survive.

Secondly, AI may cause a rethinking of what software looks like in a world where we control computers with conversations instead of mouse clicks. AI-native software startups, unburdened by the baggage of years of design decisions, can leapfrog incumbents with new ways of doing things.

Though it has grown to include other applications, Workday is primarily known for its human resources software. Years ago, Peoplesoft dominated HR software. Just months after Oracle was successful in a hostile takeover of the company in 2005, one of the deposed Peoplesoft co-founders, David Duffield, founded Workday along with other former Peoplesoft executives.

At the time, enterprise software was a complex package that companies ran on their own servers. This was expensive, cumbersome, and incurred many internal costs. Workday offered cloud software that ran in a web browser. This relieved customers of the burden of hosting the software, and replaced uncertain cost structures with simple user-based licenses. This new, simpler model of delivering business software also brought in new customers from small- and medium-sized firms.

Eventually, the cloud software model won out and so did Workday. Now, it faces the "innovator's dilemma." A new technology came along -- AI -- that threatens to upend how Workday's customers work, and leave Workday behind. The company can't abandon its current business model, but it is under threat. In a world filled with uncertainties, it has to defend its current revenue streams, while also transitioning to something new.

Like many of the other software companies, Workday's solution is to be the one selling the agents to customers, hoping to disrupt themselves. It is leaning into its area expertise to drive adoption, and hoping that will provide a moat to protect it from the AI onslaught.

Write to Adam Levine at adam.levine@barrons.com

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February 24, 2026 01:00 ET (06:00 GMT)

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