Jim Cramer Thinks This Struggling Stock Could See A “Big Earnings Acceleration”

Jim Cramer expressed optimism about Workday, Inc. (NASDAQ:WDAY), a human resources and financial software provider, which has experienced a decline in stock value over the past year and year-to-date. Cramer pointed to Workday's CEO, Aneel Bhusri, who recently sounded "joyous" during a discussion about new products that appear to be performing well.

Cramer believes that if Workday effectively sells these products, the company could see a significant earnings acceleration, especially in light of the "SaaSpocalypse" concerns about reduced demand for software-as-a-service firms. The company's fiscal second quarter report showed strong financial performance, with revenue growth of 12.8% and subscription revenue of $2.5 billion, marking a 13.9% increase.

Furthermore, AI-related annual contract value (ACV) grew by a remarkable 200%, and over 5,500 customers used at least one AI agent, resulting in a 35% sequential growth in AI-related sales. Despite these positive indicators, Workday's subscription growth of 12% for the third quarter falls short of the high-growth expectations from a software company, and the company anticipates another slowdown in subscription growth for fiscal year 2028.

The decline in the number of hedge funds holding Workday's stock and high short interest further raise concerns about the company's future.