What Makes Workday (WDAY) a Lucrative Investment?

Madison Investments, an investment advisor, released its fourth-quarter 2025 investor letter for the “Madison Large Cap Fund”. A copy of the letter can be downloaded here. In the fourth quarter, the S&P 500 returned 2.65%, resulting in a full-year return of 17.9% for 2025. Over the last three years, the Index has achieved annual growth of over 21%. Following the recent trends, market leadership was defined by High Beta and Momentum factors, with narrow participation. However, in the fourth quarter, the market saw slight improvements in previously lagging sectors like Healthcare, Financials, and Consumer Discretionary. Still, mega-cap technology companies remained the primary drivers of the S&P 500's overall return, indicating high stock concentration. Against this backdrop, the Madison Large Cap Fund (Class I) appreciated 3.43% compared to the S&P 500 Index’s 2.65% return. In addition, please check the Fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Madison Large Cap Fund highlighted stocks like Workday, Inc. (NASDAQ:WDAY). Workday, Inc. (NASDAQ:WDAY) is a leading enterprise software company that provides cloud applications for human resources and financial management. On February 23, 2026, Workday, Inc. (NASDAQ:WDAY) stock closed at $129.21 per share. One-month return of Workday, Inc. (NASDAQ:WDAY) was -32.30%, and its shares lost 50.65% over the past 52 weeks. Workday, Inc. (NASDAQ:WDAY) has a market capitalization of $34.499 billion.

Madison Large Cap Fund stated the following regarding Workday, Inc. (NASDAQ:WDAY) in its fourth quarter 2025 investor letter:

"It was an active quarter for the portfolio. We initiated positions in Workday, Inc. (NASDAQ:WDAY) and Honeywell. Workday is a market-leading human resources and financial management software company. Over the last couple years, the company has transitioned to a new leadership team, which is focused on both sustaining double-digit revenue growth and expanding margins. To sustain double digit growth, Workday has expanded its product suite to address underpenetrated customer groups across public institutions, international corporations, and medium sized enterprises. It’s also investing in commercializing AI agents, which should be additive to revenue growth. Similar to what we’ve observed at other leading software companies, we also believe margins have the potential to meaningfully expand under the new leadership team. Over the coming years, this combination of solid revenue growth, expanding margins, and share repurchases should generate considerable earnings-per-share growth. We believe this growth profile is underappreciated, especially since Workday also has an excellent balance sheet, terrific cash flow, and best-in-class customer retention rates."

Workday, Inc. (NASDAQ:WDAY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 69 hedge fund portfolios held Workday, Inc. (NASDAQ:WDAY) at the end of the fourth quarter, up from 64 in the previous quarter. While we acknowledge the potential of Workday, Inc. (NASDAQ:WDAY) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Workday, Inc. (NASDAQ:WDAY) and shared a list of stocks that Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.