Workday Shares Surge 9% Following Inclusion in S&P 500 Index

 

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

Workday’s shares soared 9% in extended trading on Friday after S&P Dow Jones Indices announced that the company will join the S&P 500 stock index, replacing Amentum Holdings. The change will take effect on December 23.

The addition of Workday, which has a market capitalization of approximately $70 billion, reflects its strong performance and profitability after years of financial struggles. The cloud software company, known for its human resources and finance software, has shown steady growth. It reported $193 million in net income on $2.16 billion in quarterly revenue for November, marking a 16% year-over-year revenue increase. Furthermore, Workday has projected 14% subscription revenue growth in fiscal 2026.

Founded in 2005 and based in Pleasanton, California, Workday went public on the New York Stock Exchange in 2012 and transitioned its listing to Nasdaq five years later. The company is now firmly profitable after reporting net losses prior to fiscal 2022, meeting the criteria for inclusion in the S&P 500. According to S&P Dow Jones, companies must demonstrate profitability in their most recent quarter and show consistent profit over the last four quarters to qualify for inclusion in the index.

Following leadership changes in February, Carl Eschenbach, former VMware executive and Sequoia Capital investor, is now Workday’s sole CEO after previously serving as co-CEO with Workday co-founder Aneel Bhusri. During a recent analyst call, Eschenbach highlighted plans to introduce AI-powered solutions. These include an AI agent for streamlining expense reports this year and another designed to identify inefficiencies in business operations by 2025.

Stocks often see a boost when added to major indices like the S&P 500, as fund managers adjust their portfolios to align with these changes. While Workday’s future prospects are promising, recent examples of tech companies added to the index, such as Super Micro, demonstrate that inclusion doesn’t always guarantee sustained investor returns.

Super Micro shares saw a significant rally upon its inclusion in March, driven by demand for Nvidia-based servers. However, financial missteps led to sharp declines in the stock price, and shares are now approximately 60% off their peak. The company recently secured a Nasdaq extension to maintain its listing.

Workday’s inclusion highlights investor optimism about its profitability, technological focus, and AI-driven strategies as it builds its role in the enterprise software and cloud computing industries