Workday Navigates AI-Driven Dilemma After Solid Q4 Earnings

Workday posted solid Q4 results with adjusted operating income above expectations, but issued weak guidance for fiscal 2027 and showed a year-end subscription backlog about $1 billion below analyst forecasts, triggering a after-hours stock drop. The rise of AI, especially agent software that can automate development tasks, threatens traditional software models and creates an innovator’s dilemma for incumbents like Workday. The company plans to defend its current revenue while expanding into AI agents, a transition led by co-founder and CEO Aneel Bhusri who says cloud software isn’t getting replaced, it’s being built upon.