Workday (WDAY): Evaluating Valuation as New AI Solutions and Partnerships Expand Ecosystem Reach

Workday (WDAY) has been busy, rolling out a new Custom AI Model Library for its Contract Intelligence Agent while adding several key partners, such as Three Link Solutions and Medix Technology, to its growing ecosystem. These moves point to a company expanding its reach across HR, finance, and payroll.

See our latest analysis for Workday.

These recent launches and partnerships come as Workday’s platform continues to gain traction across more corners of the enterprise. While the current share price sits at $245.67, momentum has been mixed. After a modest 1.9% gain over the last three months, the total shareholder return sits just below flat for the year but surges to over 57% across three years. Recent ecosystem gains may be sparking renewed investor interest in Workday’s long-term growth story.

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With strong technology upgrades, prominent ecosystem partnerships, and a price that remains below analyst targets, the big question now is whether Workday presents an attractive entry point or if future growth is already reflected in the stock.

Most Popular Narrative: 12.9% Undervalued

Workday's most widely followed narrative puts its fair value at $282.05, pointing to upside from the recent close of $245.67. This view combines promising new product launches with expectations for profitability and margin gains, while monitoring headwinds from competition and business momentum.

"Broad adoption of Workday's AI-enabled HR and finance products (with over 70% of customers using Workday Illuminate and over 75% of net new deals including at least one AI product), along with acquisitions like Paradox and Flowise, is fueling cross-sell/upsell activity, increasing average contract values and bolstering future topline growth."

Read the complete narrative.

Want to know the engine powering this premium? The fair value is based on projections of higher earnings, margin expansion, and strong top-line growth that most rivals struggle to match. Only the full narrative reveals the bold numbers and future profit multiple that support this eye-catching target.

Result: Fair Value of $282.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, fierce competition from emerging AI-driven software providers and new regulatory challenges could rapidly change Workday’s growth outlook.

Find out about the key risks to this Workday narrative.

Another View: High Price Compared to Peers

While models point to upside, Workday’s price-to-earnings ratio tells a different story. At 112.5x, its valuation is far above the US software industry average of 35.2x and its own fair ratio of 55.4x. This suggests investors are already paying a steep premium for future growth. Is this justified, or is risk getting ahead of reward?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Workday Narrative

If you see things differently or want to dig into the numbers on your own, you can shape your own view in just a few minutes. Do it your way

A great starting point for your Workday research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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