Shares of the HR software company rose 18% on Thursday on reports of a potential private-equity acquisition

With Workday holding a market capitalization near $51 billion, a takeover by Silver Lake would rank among the largest tech take-private deals in history.

Workday shares saw their best-ever single-day performance Thursday on the back of buyout rumors, creating a ripple effect across the entire software sector.

Private-equity firm Silver Lake is in talks to acquire Workday, Reuters reported on Thursday, citing people familiar with the matter. The two companies have held ongoing discussions in recent months, although there is no guarantee a final agreement will be reached.

Representatives for Workday did not immediately respond to a MarketWatch request for comment.

Shares of Workday (WDAY) popped as much as 30% on the news and closed Thursday's trading up 18%. That marked the stock's largest percentage increase on record, according to available data going back to 2012.

The iShares Expanded Tech-Software Sector ETF IGV also saw a 3% increase on Thursday, with names like HubSpot (HUBS) and DocuSign $(DOCU)$ posting double-digit gains.

If confirmed, the Workday buyout would be a continuation of an ongoing trend sweeping through the software sector.

Software stocks have been battered by concerns of artificial intelligence threatening traditional software-as-a-service business models, with new products from the likes of Anthropic boasting capabilities in cybersecurity, human resources and more.

Prior to Thursday's stock pop, shares of Workday were down 18% this year. Investors have been concerned about Workday's monetization prospects and its ability to maintain subscription growth in the face of AI-native vendor competition and decreasing company headcounts.

The stock declines have made software companies attractive opportunities for private-equity firms looking to acquire assets at a discount, perform strategic business overhauls and then exit at a markup.

Also: A buyout firm reportedly has Dayforce in its sights. Shares of the HR software group are soaring.

In February, Thoma Bravo purchased human-capital management company Dayforce for $12.3 billion, marking the private-equity firm's largest take-private deal to date.

With a market capitalization of nearly $51 billion, Workday would be one of Silver Lake's largest tech investments to date. The private-equity firm, alongside Jared Kushner's Affinity Partners and Saudi Arabia's Public Investment Fund, completed its acquisition of videogame developer Electronic Arts earlier this month via a $55 billion leveraged buyout.

-Christine Ji