As Oracle soars on earnings, and SAP sets up, fellow enterprise software leader Workday taps artificial intelligence and machine learning to float into buy range. Boosted by clear signs of demand, WDAY stock earns a spot on the IBD Breakout Stocks Index.
Highlighting its strength, Workday has worked its way onto the IBD 50 and IBD Big Cap 20. Top money managers have also focused their attention on the leading provider of enterprise cloud applications for finance and human resources.
Workday made this month's list of new buys by the best mutual funds, joining industry group peers ServiceNow and Salesforce. Home to an impressive crop of highly rated companies, the enterprise software group ranks a strong No. 22 out of the 197 industries IBD tracks.
Top institutional investors also scooped up over $155 million worth of ORCL stock, which hails from the even-stronger, eighth-ranked Computer Software-Database industry group. Oracle stock continues to blast higher after topping earnings and sales estimates in its latest quarterly report.
See Who Joins Workday The IBD Breakout Stocks Index
ServiceNow, Salesforce, Workday Lead Demand
With ServiceNow, Salesforce and Workday leading the way, the table below shows all the enterprise software stocks that made the latest list of new buys by the best mutual funds. The table includes the inflow by top funds — the dollar amount invested in each. Confirming institutional demand for the group, each stock a 94 or higher Composite Rating, with the exception of Nutanix.
Palantir Technologies, Cloudflare, Datadog and Dynatrace have also ascended onto the list.
Workday, ServiceNow, Datadog, Dynatrace and Manhattan Associates all sport an A SMR Rating. This proprietary rating tracks sales growth, profit margins and return on equity, giving an overview of a company's fundamental performance and efficiency.
| Company | Symbol | $ Amt Invested By Top Funds (mil) | Comp Rating | EPS Rating | RS Rating | Ind Group RS | SMR Rating |
|---|---|---|---|---|---|---|---|
| ServiceNow | NOW | 238.29 | 99 | 99 | 90 | A | A |
| Salesforce | CRM | 207.28 | 96 | 98 | 92 | A | B |
| Workday | WDAY | 27.57 | 99 | 98 | 90 | A | A |
| Palantir Technologies | PLTR | 16.31 | 99 | 80 | 98 | A | C |
| Cloudflare | NET | 11.6 | 99 | 80 | 92 | A | B |
| Datadog | DDOG | 11.29 | 98 | 98 | 89 | A | A |
| Dynatrace | DT | 5.51 | 99 | 99 | 92 | A | A |
| Nutanix | NTNX | 4.93 | 87 | 80 | 93 | A | NA |
| JFrog | FROG | 4.55 | 99 | 80 | 92 | A | C |
| Manhattan Associates | MANH | 1.53 | 98 | 95 | 95 | A | A |
| Blackbaud | BLKB | 0.64 | 94 | 79 | 93 | A | B |
| Monday.com | MNDY | 0.61 | 96 | 80 | 95 | A | C |
| UiPath | PATH | 0.37 | 97 | 80 | 87 | A | C |
| Qualtrics International | XM | 0.13 | 99 | 80 | 93 | A | C |
Artificial Intelligence News And AI Stocks To Watch
Workday Embeds AI And Machine Learning Into Its Core
Based in Silicon Valley, Workday provides enterprise cloud applications for finance and human resources. Its applications for financial management, human resources, planning, spend management, and analytics have artificial intelligence and machine learning built into their core.
The deep integration of AI and machine learning enables clients to power intelligent predictions and automation into their workflows.
Including more than 50% of the Fortune 500, over 10,000 organizations around the world use Workday.
Over the last three years, the company has generated average annual earnings growth of 22%. Building on rebounding profitability in recent quarters, Workday posted a 58% EPS spike to $1.31 in its latest quarterly fiscal report on May 25.
For the current quarter, analysts expect a 50% rise in EPS, leading to 46% earnings growth for the full year.
Sales growth has been solid and steady, averaging 19% revenue gains over the last three years. Last quarter, Workday generated 17% growth to roughly $1.7 billion.
WDAY Stock Floating In Buy Zone
After reporting on May 25, Workday gapped up in huge volume to clear a 206.68 buy point. After dipping but finding support at its 21-day exponential moving average, WDAY stock rose 1.5% Wednesday to close at 217.31, just slightly above the conventional buy range, which extends to 217.01. Volume was below average but rising.
Look for strong institutional demand and expanding AI and machine learning trends to keep Workday on the rise.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index in addition to, or rather than, buying individual stocks. Learn more here about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
