Workday (WDAY), a leading provider of enterprise cloud applications for finance and human resources, has been gaining momentum as one of the top AI stocks to watch. The company has leveraged artificial intelligence and machine learning to power intelligent predictions and automation into its workflows, attracting demand from more than 10,000 organizations around the world, including over 50% of the Fortune 500.
Workday Beats Earnings and Revenue Estimates
Workday reported its fiscal 2024 second quarter financial results on August 24, 2023, beating analysts’ expectations on both earnings and revenue. The company posted a net income of $136,000, or $1.43 per share, on revenue of $1.79 billion, compared to a net loss of $77.8 million, or $0.34 per share, on revenue of $1.55 billion in the same quarter last year.
The company’s earnings per share increased by 72% year-over-year, marking the third consecutive quarter of earnings acceleration. The company’s revenue grew by 16% year-over-year, driven by strong subscription revenue growth of 18%. Workday also raised its full-year guidance for subscription revenue to a range of $7.28 billion to $7.29 billion, up from its previous forecast of $7.25 billion to $7.27 billion.
Workday’s co-CEO and co-founder Aneel Bhusri said in a statement that the company’s strong performance reflects its “continued focus on delivering value for our customers across finance and HR.” He also highlighted the company’s innovation in areas such as machine learning, blockchain, and augmented analytics.
Workday Shows Strength Amid Market Correction
Despite the recent market correction, Workday has been showing resilience and strength as one of the leading AI stocks. The stock climbed 5.38% on August 25, after the company announced its quarterly results, and has been holding support at its 21-day and 50-day moving averages.
Workday’s relative strength line, which compares the stock’s performance to the S&P 500 index, has been trending upward, indicating its market leadership. The stock also has a strong Composite Rating of 99 out of 99, which combines key fundamental and technical factors into a single score.
Workday is currently trading above a buy point of 206.68 from a cup pattern that it cleared in June. The stock has a potential buy zone up to 217.01, which is 5% above the entry point. Investors should look for signs of institutional buying and volume confirmation as the stock advances.
Workday Joins Other Top AI Stocks on IBD Breakout Stocks Index
Workday is not the only AI stock that has been attracting attention from investors and analysts. The company has joined other top AI stocks such as Nvidia (NVDA), Google (GOOGL), Microsoft (MSFT), and Meta Platforms (META) on the IBD Breakout Stocks Index, which features companies that are showing strong price performance and have the potential to make big moves.
Workday has also earned a spot on this month’s list of new buys by the best mutual funds, along with Meta stock, Tesla (TSLA), and fellow enterprise software firms ServiceNow (NOW), Salesforce (CRM), Datadog (DDOG), and Monday.com (MNDY). These companies have been tapping AI demand to drive growth and innovation in their respective fields.
Workday has also made its way onto both the IBD 50 and IBD Big Cap 20 screens, which feature the top growth stocks and large caps in the market. The company shares the highest-possible Composite Rating of 99 with ServiceNow and Nvidia in the Computer Software-Enterprise industry group, which ranks No. 42 out of the 197 industries IBD tracks.
