Workday co-founder Aneel Bhusri at the World Economic Forum in Davos, Switzerland, on Jan. 23, 2020, when he was CEO of the company. Bhusri will once again take on the role, with Carl Eschenbach stepping down.

Adam Galica | CNBC

Workday on Monday announced that CEO Carl Eschenbach is stepping down from his role and will be replaced by the company’s co-founder, Aneel Bhusri, effective immediately.

Bhusri has previously held a range of leadership roles at the software maker, serving as co-CEO from 2009 to 2014, CEO from 2014 to 2020, co-CEO from 2020 to 2024 and executive chair from 2024 to 2026.

Eschenbach was named co-CEO of Workday alongside Bhusri in 2022, and took on the top job solo in 2024.

Software stocks, including Workday, have been under pressure in recent months as investors have grown worried about the potential for artificial intelligence to disrupt the sector. Workday shares lost 17% last year and are down more than 20% year to date.

Shares of the company sank more than 5% on Monday.

“We’re now entering one of the most pivotal moments in our history,” Bhusri said in a statement. “AI is a bigger transformation than [software as a service] — and it will define the next generation of market leaders.”

Salesforce, Oracle and Microsoft are among the major software as a service companies.

Last month, Eschenbach tried to brush off concerns about AI’s impact on the software sector, telling CNBC that the narrative is “overblown” and “not true.”

Workday cut roughly 1,750 jobs last year to bolster its investment in the technology.

“It’s been a privilege to serve as CEO over the past three years and I’m proud of all we achieved — instilling greater operational discipline, expanding globally, broadening our industry focus, and laying meaningful groundwork in AI,” Eschenbach said in a statement on Monday.

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The Workday Inc. pop-up pavilion ahead of the World Economic Forum (WEF) in Davos, Switzerland, on Saturday, Jan. 19, 2025.

Hollie Adams | Bloomberg | Getty Images

Shares of software maker Workday slid nearly 8% on Wednesday as analysts lowered their price targets, citing a lack of a upside after the company revised its full-year subscription revenue forecast.

Many software stocks have been under pressure in 2025 as commentators have worried that generative artificial intelligence tools that can quickly write lines of code might pose risks to incumbents.

This year, Workday has announced the launch of several AI agents and expanded its offerings through startup acquisitions. Earlier this month, Workday completed the $1.1 billion purchase of AI and learning software company Sana.

Despite those moves, Workday’s third-quarter earnings report on Tuesday failed to impress Wall Street.

The company called for $8.83 billion in subscription revenue for the fiscal year that will end in January 2026, implying 14.4% growth, but the figure was up just $13 million from the company’s guidance in August. The new number includes contributions from Sana and a contract with the U.S. Defense Intelligence Agency, Workday finance chief Zane Rowe told analysts on a conference call.

“Investors were likely looking for more of a beat-and-raise quarter,” Cantor Fitzgerald analysts Matt VanVliet and Mason Marion wrote in a note to clients. They have the equivalent of a buy rating on Workday stock. The new number, they wrote, “borders on a slight guide down.” The analysts held their 12-month price target on Workday stock at $280.

Stifel, with a hold rating on the stock, lowered its Workday target to $235 from $255.

“It does not appear that the underlying momentum of the business is showing any signs of stabilization,” Stifel’s Brad Reback and Robert Galvin wrote in a note.

Reback and Galvin said Workday implied that growth from its 12-month subscription revenue backlog will continue to slow when removing impact from acquisitions. They expect the trend to continue even as customers sign up for Workday’s AI products, they wrote.

The outcome was “like turkey without the gravy,” Evercore analysts, with the equivalent of a buy rating on the stock, wrote in the title of their note.

Analysts at RBC, which also has the equivalent of a buy rating on Workday shares, lowered their price target to $320 from $340. Despite the mixed guidance, they wrote in a note to clients, results for the fiscal third quarter did exceed consensus. Plus, AI products contributed over 1.5 percentage points of annualized revenue growth, Workday CEO Carl Eschenbach said on Tuesday’s conference call.

‘”We remain encouraged by early AI momentum,” the RBC analysts wrote.

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A close-up of the Workday logo on its headquarters in Pleasanton, California.

Smith Collection | Archive Photos | Getty Images

Workday shares jumped 9% in extended trading on Friday after S&P Dow Jones Indices said the cloud software vendor will be added to the S&P 500.

The company, which has a market cap of about $70 billion, will replace Amentum Holdings in the index effective Dec. 23, according to a statement. The S&P 500 has added several other prominent technology stocks this year, including Dell and Palantir.

Workday, founded in 2005 and based in Pleasanton, California, went public on the New York Stock Exchange in 2012. Five years later, the company switched its listing to the Nasdaq.

In November, Workday reported $193 million in net income on $2.16 billion in quarterly revenue, which was up 16% from a year earlier. The company called for 14% revenue growth in the 2026 fiscal year. Prior to fiscal 2022, Workday, which sells human resources and finance software, was reporting net losses.

To be eligible for inclusion in the prominent U.S. index, companies need to show a profit in the most recent quarter, along with profit in the four most recent quarters.

In February, Carl Eschenbach, a former VMware operating chief and Sequoia Capital investor, became Workday’s sole CEO after being co-CEO since late 2022, alongside co-founder Aneel Bhusri. Workday will release an artificial intelligence agent for creating and submitting expense reports this year, and an agent for identifying inefficiencies in business processes will arrive in 2025, Eschenbach told analysts on a November conference call.

Stocks often rally when they’re added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.

While more tech companies have been joining the S&P 500, not all of them have proven to be money makers for investors who buy index funds. Server maker Super Micro was added to the S&P 500 in March after a huge rally in the stock, driven by demand for Nvidia-based servers.

Super Micro shares peaked soon after that announcement but then tumbled in the ensuing months as the company failed to file its financials on time. The stock is about 60% off its peak, and the company said on Friday that it received an extension from Nasdaq to keep its listing.

WATCH: Workday co-CEO Carl Eschenbach on the impact of AI, job market landscape in 2024

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