Shares of Workday (NASDAQ:WDAY) jumped over 8% in U.S. premarket trading on Wednesday after activist investor Elliott Management disclosed a stake in the cloud-based HR software company valued at more than $2 billion.
Elliott expressed confidence in Workday’s leadership, stating the CEO and CFO “have demonstrated effective management in recent years.”
The company, which provides a cloud platform for tasks such as recruitment and payroll, also announced plans to repurchase $5 billion of its shares through the 2027 fiscal year, signaling potential support for growth initiatives.
The move comes amid a string of acquisitions aimed at strengthening Workday’s position in AI. Earlier this week, the company revealed a $1.1-billion deal to acquire AI firm Sana, following previous purchases of Paradox and Flowise.
“Three acquisitions in a month shows an increasing appetite from the leadership team to lean into M&A,” analysts at Piper Sandler said in a client note on Tuesday, raising their rating of Workday to “neutral” from “underweight” despite “elevated near-term execution risks.”
“If speed is the new AI moat, the addition of three promising AI products […], alongside 1,300 [plus] new employees with AI expertise, shows a strong appetite to move faster,” the strategists added.
The HR software sector has seen significant M&A activity recently, with private-equity firm Thoma Bravo agreeing last month to acquire Workday rival Dayforce for $12.3 billion.
Workday shares are down roughly 13% year-to-date. In August, the company raised its annual subscription revenue guidance, though sentiment was tempered by guidance for the current quarter that met Wall Street expectations.
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