Strategic Asset Reallocation in the AI-Centric Growth Landscape: Why Workday (WDAY) Was Exited by Top Growth Funds in Q3 2025

In Q3 2025, several top growth-oriented investment strategies, including the Brown Advisory Large-Cap Growth Strategy, ClearBridge Large Cap Growth Strategy, and John Hancock U.S. Global Leaders Growth Fund, exited their positions in Workday (NASDAQ: WDAY). These exits, driven by a strategic reallocation of capital toward AI-centric opportunities, reflect a broader shift in the growth investing landscape. As markets increasingly prioritize artificial intelligence (AI) as the next frontier of innovation, traditional cloud and enterprise software players like Workday are being reassessed for their relative risk-reward profiles.

The Case of Brown Advisory: Underperformance and AI Prioritization

Brown Advisory's decision to exit Workday was explicitly tied to its underperformance relative to the Russell 1000 Growth Index, with the fund reporting a net return of -0.88% in Q3 2025. The strategy, which has a significant allocation to AI-driven equities, acknowledged that its underweight position in speculative, momentum-driven AI segments-such as generative AI infrastructure and semiconductors-hindered returns. By divesting Workday, the fund aimed to rebalance its portfolio toward what it perceives as higher-conviction AI winners, even if it means forgoing steady but less explosive growth from established SaaS (software-as-a-service) companies.

ClearBridge's Strategic Pivot: AI Winners vs. AI Losers

ClearBridge Large Cap Growth Strategy similarly exited Workday, aligning with its broader portfolio reallocation toward "perceived AI winners" and away from "perceived AI losers" as noted in its quarterly analysis. While Workday's stock closed at $236.48 in October 2025-a 13% year-over-year revenue growth backdrop-the fund emphasized that certain AI-focused peers offered a more compelling risk-reward asymmetry. This calculus is critical for growth funds: in an environment where AI-driven stocks can exhibit outsized volatility and returns, capital preservation and upside potential often outweigh loyalty to slower-growth, cash-flow-positive companies like Workday.

John Hancock's Exit: Competitive Pressures and Sector Rotation

The John Hancock U.S. Global Leaders Growth Fund exited Workday in Q3 2025 due to "competitive pressures," as noted in its quarterly commentary. While the fund did not explicitly name AI as a driver, the timing of the exit coincides with a sector-wide rotation into AI infrastructure and application-layer stocks. Workday, despite its robust financials (e.g., a $2.348 billion Q2 2026 revenue figure), faces an existential challenge in an AI-centric world: its core enterprise resource planning (ERP) and human capital management (HCM) solutions are seen as complementary rather than foundational to AI innovation. This dynamic has pushed growth funds to prioritize companies directly enabling AI adoption, such as cloud providers, chipmakers, and AI-native platforms.

Broader Implications for Growth Investing

The exits by these top growth funds underscore a paradigm shift in the post-2025 investment landscape. As AI transitions from a disruptive force to a core infrastructure layer, capital is increasingly directed toward companies that either:
1. Enable AI infrastructure (e.g., semiconductors, cloud computing, data centers), or
2. Offer AI-native applications (e.g., generative AI tools, autonomous systems).

Workday, while a leader in enterprise software, lacks the direct exposure to AI's transformative potential that growth funds now prioritize. This trend is further amplified by the decline in hedge fund ownership of Workday, with holdings dropping from 85 to 76 portfolios between Q1 and Q2 2025, signaling a loss of momentum among institutional investors.

Conclusion: Navigating the AI-Centric Growth Paradigm

For investors, the exits of Workday by these top growth strategies highlight the importance of aligning portfolios with the evolving narrative of AI-driven value creation. While Workday's fundamentals remain strong, its role as a "supporting actor" in the AI story has diminished its appeal relative to companies at the forefront of the AI revolution. As growth funds continue to reallocate capital toward high-conviction AI plays, the pressure on traditional SaaS leaders to innovate or pivot will only intensify.