Workday's shares plunged 6% in extended trading after the cloud software company projected subscription revenue growth of 12% to 13% for fiscal 2027. The forecast failed to impress investors despite the company narrowly beating fourth-quarter estimates, with shares already down more than 37% in 2026 and over 50% in the past year.

The company expects fiscal 2027 subscription revenue between $9.925 billion and $9.950 billion, with a non-GAAP operating margin of about 30%. For the first quarter ending April 30, 2026, Workday forecast subscription revenue of $2.335 billion, up 13%, and a non-GAAP operating margin of 30.5%. Fourth-quarter earnings came in at $2.47 per share, above analysts' estimates of $2.32, with revenue rising to $2.53 billion compared to expectations of $2.52 billion.

The selloff reflects broader concerns about enterprise software valuations as AI advances threaten traditional business models. New desktop AI agents that automate complex tasks and AI systems that generate code could lower development costs, potentially reducing software scarcity and challenging existing pricing power across the sector. These worries have weighed on high-multiple software names even as companies like Workday invest heavily in AI integration.