Workday CEO calls AI-led software selloff narrative ‘overblown’

Source Domain: www.cnbc.com

AI Misconception as Threat: Workday CEO Carl Eschenbach dismissed concerns that AI is detrimental to software business models, describing the notion as an “overblown narrative” and emphasizing AI as a “tailwind” rather than a “headwind” for the company.
Market Concerns: There has been substantial sell-off in software stocks recently due to fears that AI tools will disrupt the sector and replace traditional, profitable software business models.
Financial Performance Concerns: Workday’s stock suffered notable declines, losing 17% last year and an additional 15% year to date in 2026. This downturn was exacerbated by the company’s third-quarter subscription revenue guidance, which left analysts and investors concerned.
Broader Industry Impact: Similar sales declines were observed in software giants like Adobe (21% drop last year), Salesforce (21% drop last year), and HubSpot (over 40% drop), signaling broader market anxieties regarding AI’s impact.
Focus on AI Tools: Eschenbach highlighted that businesses are increasingly relying on Workday for its AI tools and first-party data, which the company is using strategically to stay ahead of competitors offering third-party AI tools.
Investment in AI: To enhance its AI capabilities, Workday laid off about 1,750 employees over the previous year. This is part of a broader trend where software companies are investing heavily in AI tools to preempt competitive pressures.

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