Shares of Workday slumped in premarket U.S. trading on Wednesday, after the group’s projection for subscription revenue growth for its current fiscal year came up short of investor expectations.

The stock has shed more than 36% in value so far in 2026,  and is down over 48% in the past one-year period as traders assess the growth prospects for enterprise software companies amid rapid advances in artificial intelligence.

New desktop AI agents that can automate complex tasks on a computer have prompted broader questions about the long-term role of traditional software applications. AI systems can now generate code and automate parts of the development process, potentially lowering the cost of building production-ready software.

If development costs fall sharply, more software could be created, reducing scarcity and challenging existing pricing power and business models across the sector. Those concerns have weighed on high-multiple software names, even as companies such as Workday invest heavily to embed AI into their products.

Earlier this month, co-founder Aneel Bhusri returned as chief executive, replacing Carl Eschenbach, as the company accelerates its AI push.

In a note, analysts at Morgan Stanley said Bhusri’s return has coincided with “a shift in strategy towards organic innovation,” as Workday looks to emulated “the focus and speed of a startup, on top of a core of a deterministic system of record containing a hugely valuable set of data.” However, the analysts flagged some uncertainty around the timeline for returns for the AI investments, saying the development, adoption and eventual monetization of new AI agents could prove to be a “multi-quarter or longer endeavor.”

Workday said it expects fiscal 2027 subscription revenue of $9.925 billion to $9.950 billion, below estimates of $10 billion, according to LSEG estimates cited by Reuters. Adjusted operating profit margin is seen at about 30.0%.

For the fiscal first quarter ending April 30, Workday forecast subscription revenue of $2.335 billion, up 13%, and a non-GAAP operating margin of 30.5%.

In the fourth quarter, earnings were $2.47 per share, above analysts’ estimates of $2.32. Revenue rose to $2.53 billion, compared with expectations of $2.52 billion.