The reported talks have been going on for months, according to unnamed sources cited by Reuters. That timing matters because Workday's stock has been under pressure lately.
The worry is that AI tools could upend the economics of the software business. If AI can do more of the work that software used to do, why keep paying for expensive licenses? That question has weighed on Workday and its peers.
Software stocks have taken a hit this year as investors worry that AI will let companies do more with fewer tools. A deal in this sector could signal that big investors still see value in software companies, even with those AI worries hanging around.
Silver Lake is known for making large, careful bets on tech firms, so its interest in Workday is a notable vote of confidence. It also suggests that the selloff in software stocks may have created opportunities for buyers with deep pockets.
Workday's leadership has been in flux. In March, co-founder Aneel Bhusri returned to the CEO job after Carl Eschenbach stepped down.
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Bhusri has led the company before, both as CEO and co-CEO, so he knows the role well.
The timing of the reported talks also lines up with a good moment for the business. In May, Workday's results beat forecasts and the company raised its outlook, helped by AI momentum.
So the company is not limping into these negotiations. Still, the stock is 7% below where it was a year ago.
That gap shows how much the AI fear has taken out of the shares, even after the recent recovery. The company has bounced back from a recent drop, but it has not fully regained its footing.
Analyst Brent Thill told CNBC's "Power Lunch" that the deal makes sense. "Aneel Bhusri, the CEO, and Egon [Durban] from Silver Lake know each other well through many connections. So we think certainly this could make sense, and I think this goes back to how badly hit software's been," he said.
For everyday investors, this is a story about the mood of the market as much as it is about one company. When a big private equity firm is willing to bet on a software maker, it suggests the selloff in that sector may have gone too far.
It also shows that AI is not just a threat to software companies. It can be a reason to buy them, if the company is using AI to grow.
The deal is not done yet, and talks can fall apart. But the fact that they are happening at all is a sign that smart money sees opportunity where others see risk. The size of the move shows how eager investors were for a sign that software companies still have value.
For those watching from the sidelines, the message is that uncertainty can create opportunity. That is worth keeping in mind if you hold software stocks or are thinking about adding some.
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