Workday (WDAY) Sustains Growth with Strong Backlog and Margin Expansion

Workday Inc. (NASDAQ:WDAY) is one of the best large-cap tech stocks to buy now. Workday stands out as a market leader in cloud-based finance, HR, planning, and analytics solutions, addressing a vast $160 billion total addressable market. With more than 11,000 global customers across over 175 countries, including over 60% of the Fortune 500, its scale and entrenched enterprise relationships create strong competitive moats.

Workday (WDAY) Sustains Growth with Strong Backlog and Margin Expansion

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The company is executing on a disciplined growth strategy, targeting FY26 (FY ends in January) subscription revenues of $8.8 billion, representing an 18% CAGR from FY22 levels. Profitability is improving in tandem, with adjusted operating margins projected to expand to 28.5% in FY26, up 560 basis points since FY22. Gross revenue retention rates remain exceptionally high, underscoring the stickiness of Workday’s solutions.

Recently reported Q1 FY26 results highlight this momentum: subscription revenue grew 13.4% year-over-year, with a 30.2% adjusted operating margin, an improvement of 437 basis points. In addition, operating cash flow rose 23% to $457 million, and free cash flow surged 44.6%. To top it all, the $24.6 billion total subscription backlog (+19.1% YoY in Q1) provides strong visibility into future growth.

While we acknowledge the potential of WDAY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than WDAY and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.