What Happened?
Shares of finance and HR software company Workday (NASDAQ: WDAY) jumped 5.1% in the afternoon session after stocks extended their rebound, led by strong gains in the technology sector, as renewed optimism surrounding U.S.–China trade negotiations lifted market sentiment.
Contributing to the bullish sentiment was a standout earnings report from enterprise software leader ServiceNow, which topped Wall Street's expectations on both revenue and earnings. More importantly, the company's remaining performance obligations (RPO), a key forward-looking metric for future revenue, also exceeded forecasts, giving investors confidence that enterprise customers are not pulling back spending amidst uncertain macro.
The optimism was further reinforced by solid earnings from Texas Instruments and Lam Research. Their performance was especially encouraging for semiconductor stocks, which have been under pressure due to their exposure to global trade tensions. These results suggested that, despite macroeconomic uncertainties, demand in key tech verticals remained resilient.
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What The Market Is Telling Us
Workday’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock gained 14.4% on the news that the company reported strong second-quarter earnings, which beat across the board.
Workday observed a macroeconomic environment consistent with the previous quarter and reiterated full-year FY25 subscription revenue guidance while slightly raising its full-year operating margin outlook. Overall, this was a solid quarter without many surprises, which is often comforting for the market.
Workday is down 6.2% since the beginning of the year, and at $236.28 per share, it is trading 15.6% below its 52-week high of $279.91 from December 2024. Investors who bought $1,000 worth of Workday’s shares 5 years ago would now be looking at an investment worth $1,630.
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