Software stocks have tumbled amid whispers that artificial intelligence will gut legacy business models, but Workday CEO Carl Eschenbach isn’t buying it. In a pointed interview at Davos, Mr. Eschenbach labeled the notion that ‘AI is killing software’ as ‘overblown,’ arguing instead that the technology acts as a powerful tailwind for enterprise providers like his company. Workday, a leader in cloud-based human capital management and financial software, has seen its shares slide 27% in recent months, mirroring a broader sector rout.

Mr. Eschenbach’s rebuttal comes as investors grapple with AI’s disruptive potential. Tools like generative AI have sparked fears that low-code platforms and agentic systems could erode demand for traditional SaaS offerings. Yet, the Workday executive, speaking on CNBC’s ‘Squawk Box,’ insisted the panic is misplaced. ‘AI is a tailwind for us, absolutely not a headwind,’ he said, emphasizing how Workday’s vast data reservoirs position it to thrive in an AI-driven era (CNBC).

Roots of the Sector Selloff

The downturn traces back to late 2025, when reports of AI agents automating white-collar tasks ignited selloffs in names like Salesforce and ServiceNow. Workday’s stock, trading around $250 as of January 22, 2026, reflects similar anxieties despite robust fundamentals. Subscription revenue grew 17% year-over-year in the latest quarter, with AI-enhanced products like Workday Extend driving adoption among Fortune 500 clients.

Mr. Eschenbach pointed to talent acquisition as evidence of AI’s benefits. ‘We’re hiring more engineers to build AI capabilities,’ he noted, countering narratives of job displacement. Workday’s employee count holds steady near 19,500, even as it integrates AI agents for HR and finance workflows (Fortune).

AI as Enterprise Amplifier

At the World Economic Forum in Davos, Mr. Eschenbach elaborated on Workday’s ‘data moat.’ The platform processes petabytes of anonymized workforce and financial data, fueling proprietary AI models that deliver predictive insights unattainable by generalist tools like ChatGPT. This edge, he argued, shields Workday from commoditization threats. ‘There’s a narrative that AI is eating into software—that is false,’ Mr. Eschenbach told CNBC’s Jim Cramer in a September 2025 appearance, a stance he reiterated amid the latest volatility (CNBC).

Recent product launches underscore this optimism. Workday’s AI agents now handle complex tasks like talent matching and spend forecasting, boosting platform stickiness. Customers such as Valvoline are scaling operations with these tools, aiming for 3,500 locations by 2030 while maintaining culture through data-driven promotions, as highlighted in Workday’s own channels.

Davos Optimism Meets Market Skepticism

Despite Mr. Eschenbach’s Davos pitch—where he defended AI as a growth catalyst—Workday shares lagged broader indices. The S&P 500 software sector dropped 15% since November, per market data, on fears that open-source AI could bypass paid subscriptions. Investing.com reported Mr. Eschenbach dismissing these concerns outright during his CNBC slot, calling AI hype around software destruction ‘overblown’ (Yahoo Finance).

Analysts echo some caution. Piper Sandler recently trimmed targets citing AI uncertainty, though consensus earnings estimates remain intact at $6.50 per share for fiscal 2027. Workday’s fiscal Q3 results, due soon, will test this resilience, with guidance for 18% revenue growth including AI contributions.

Workforce Fears and Internal Shifts

Internally, Workday addresses employee jitters head-on. About half of U.S. workers fear AI job loss, a sentiment Mr. Eschenbach acknowledged at the Workday Rising event in San Francisco. ‘They think their jobs are going away,’ he said, but countered with retraining programs emphasizing AI as an augmentative force, not a replacement (Fortune).

This approach mirrors broader industry plays. Competitors like Oracle and SAP are embedding AI similarly, suggesting a convergence where incumbents leverage scale against nimble startups. Posts on X from industry watchers amplify Mr. Eschenbach’s view, with sentiment leaning toward AI as enhancer rather than existential threat.

Strategic Acquisitions and Roadmap Ahead

Workday’s recent moves bolster its position. The acquisition of HiredScore in 2025 enhanced AI recruiting, while partnerships with NVIDIA integrate GPU-accelerated models. Mr. Eschenbach, in his ‘Mad Money’ segment, touted quarterly results showing AI uptake: ‘AI is a tailwind for us’ (CNBC).

Looking forward, Workday targets $10 billion in annual recurring revenue by 2028, fueled by AI agents managing ‘people, money, and agents.’ At Davos, Mr. Eschenbach urged focus on execution over narrative, as covered by WebProNews, where he highlighted hires and data advantages amid stock woes (WebProNews).

Investor Implications in Volatile Times

For insiders, the divergence between Mr. Eschenbach’s conviction and market pricing signals opportunity. Valuation metrics show Workday at 8x forward sales, below historical averages, tempting value hunters. Yet risks persist: macroeconomic headwinds and AI regulation could temper growth.

Mr. Eschenbach’s repeated dismissal of doomsday scenarios—’absolutely not a headwind’—positions Workday as a bellwether. As software navigates AI integration, his voice cuts through the noise, urging a reevaluation of battered shares.