Workday's 30%+ Margin Potential: Eagle Capital's AI and Software Sector Analysis

Eagle Capital Management's second-quarter 2026 investor letter highlights that Workday (WDAY) shares may be undervalued with over 30% margin potential. The company, a leading provider of cloud-based software solutions for human resources and financial management, currently operates at mid-teen margins but has the capacity to achieve long-term margins of 30% or higher. Eagle Capital notes that the company's founder's return to the CEO role is reigniting product innovation, and AI technologies will drive workflow transformations, positioning the business more aggressively. Workday recently saw a one-month return of 43.96% after a -16.20% decline over the past year, with a market capitalization of $47.09 billion. Analysts anticipate heightened competition in the AI-driven software sector, creating winners and losers, prompting Eagle Capital to redirect capital toward less crowded opportunities while maintaining selective exposure to high-quality beneficiaries.