Workday's AI Revenue Boost May Take Time as HR Tech Budgets Fund Wider AI Push, KeyBanc Says

12:03 PM EDT, 10/16/2026 (MT Newswires) -- Workday (WDAY) may take longer to see meaningful revenue contributions from its artificial intelligence initiatives as human resources is expected to continue lagging broader AI adoption at the enterprise level, KeyBanc Capital Markets said in a note emailed Friday. Field checks show enterprise customers taking a measured approach to their AI strategy, with several citing HR technology budgets as a potential funding source for wider projects, according to the note. That likely delays revenue contributions for Workday, analysts including Jason Celino said. "We believe the timeline for more meaningful contribution remains very early and hypothesize that HR IT budgets may continue to take a back seat to more immediate AI initiatives at the enterprise IT level," Celino said. The brokerage downgraded its rating on Workday's stock to sector weight from overweight. The finance and human resources solutions provider's shares declined 3.1% in Friday trade, bringing their year-to-date losses to 11%. The stock is expected to be range-bound until AI contribution to the revenue mix increases or subscription revenue reaccelerates, Celino said. Workday raised the low end of its full-year subscription revenue outlook late in August after reporting fiscal second-quarter results above Wall Street estimates. Earlier in the week, Workday agreed to acquire agentic identity platform C1.ai. The transaction should benefit the company as identity governance needs for AI agents grow, Celino said. Separately, RBC Capital Markets said Wednesday it was incrementally positive on Workday's positioning in the agentic market. In November 2025, Workday completed the purchase of AI firm Sana. Price: 190.72, Change: -5.91, Percent Change: -3.01