Elliott Just Dropped $2B on This Beaten-Down AI Stock--Here's Why It's Suddenly Soaring

This article first appeared on GuruFocus.

Workday (NASDAQ:WDAY) surged nearly 10% in premarket trading after Elliott Management disclosed a stake worth over $2 billion and endorsed the company's current leadership team. The activist investor praised Workday's CEO and CFO as proven and effective, signaling confidence in the firm's multi-year strategy. The show of support comes as Workday sharpens its competitive edge in the fast-changing human resources software space, where AI integration has become a defining battleground. Elliott expressed optimism about its ongoing engagement with the company and hinted at long-term value creation potential.

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At the same time, Workday announced a $5 billion stock buyback plan through fiscal 2027, a move often interpreted as a sign of internal confidence in growth prospects. It also revealed its latest AI-related acquisitiona $1.1 billion purchase of AI firm Sanafurther expanding on its earlier deals involving Paradox and Flowise. Analysts at Evercore ISI noted these moves could help Workday build durable momentum in a world increasingly shaped by AI-enabled enterprise software. Workday's cloud-based platform, used for everything from payroll to audits, is seen as a foundation for integrating these new capabilities.

The Sana deal also arrives amid heightened M&A activity across the HR software sector, including Thoma Bravo's $12.3 billion agreement to acquire rival Dayforce (NYSE:DAY). Despite the recent rally, Workday's stock remains down roughly 15% year-to-date and trades at a forward P/E ratio of 22.38, below Dayforce's 26.04. While the path ahead could still hold uncertainties, the combination of strategic acquisitions, shareholder returns, and external validation from Elliott may position Workday for a stronger showing in the second half of the year.

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