Workday Shares Soar 10% on S&P 500 Inclusion
Cloud software giant Workday has been selected to join the prestigious S&P 500 index, replacing Amentum Holdings effective December 23. This move marks a significant milestone for the company, which has demonstrated impressive growth and profitability in recent years.
A Profitable Track Record
To be eligible for inclusion in the S&P 500, companies must show a profit in the most recent quarter, as well as in the four preceding quarters. Workday has successfully met this criterion, reporting $193 million in net income on $2.16 billion in quarterly revenue, a 16% year-over-year increase. The company has also projected 14% revenue growth for the 2026 fiscal year.
Leadership and Innovation
In February, Carl Eschenbach took the reins as Workday’s sole CEO, succeeding co-CEOs Aneel Bhusri and himself. Under Eschenbach’s leadership, the company is set to release an artificial intelligence (AI) agent for creating and submitting expense reports this year, followed by an AI agent for identifying inefficiencies in business processes in 2025.
Index Inclusion Boosts Stock
The news of Workday’s S&P 500 inclusion sent its shares soaring almost 10% in extended trading on Friday. This is a common phenomenon, as fund managers rebalance their portfolios to reflect index changes. While not all tech companies that have joined the index have proven to be profitable for investors, Workday’s strong track record and innovative approach suggest a promising future.
Industry Peers and Challenges
Workday joins a growing list of prominent technology stocks added to the S&P 500 this year, including Dell and Palantir. However, the company must navigate challenges such as inflation, higher interest rates, and legal claims of biased AI in its software. Nevertheless, Workday’s inclusion in the S&P 500 marks a significant achievement and a testament to its growth and success.
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