- Price
- $392.90
- Fair value
- $520.00
- Discount
- 24.4%
- Uncertainty
- High
- LSEG rating
- 1.89
- Moat
- Wide
- Next earnings
- 2026-11-26
- Next earnings is estimate
- Yes
- Company name
- Synopsys
- Sector
- Chip design software
- About
- Synopsys makes software that engineers use to design computer chips. This software is called electronic design automation, or EDA. Chip makers pay for licenses to this software, along with pre-built circuit blocks called design IP. In 2025, Synopsys bought Ansys, a maker of engineering simulation software, adding tools that test how a product performs before it is built.
- Thesis
- Synopsys and one other company, Cadence, control most of the EDA software market. Few companies can build a rival product, because chip design tools take decades of engineering to develop, and customers rarely switch. The market may be worried about the $35 billion Ansys deal. It added about $10 billion in debt, and requires the company to integrate two large engineering software firms at once. It may also be worried about how fast China trade rules can change, since a May 2025 export restriction forced a guidance cut within months. Both worries are about execution risk, not about whether engineers will keep needing this software. Nvidia's decision to invest $2 billion in Synopsys in December 2025, to help build AI-driven chip design tools together, is a sign that a large customer sees the combined company's roadmap as credible.
- Risks
- Synopsys carries about $10 billion in debt from the Ansys acquisition. If integration costs run higher than planned, or cost savings arrive slower than promised, planned margin expansion and debt reduction will slip.
In May 2025, a new US export rule briefly barred EDA software sales to China. Synopsys pulled its guidance and cut its earnings forecast before the rule was reversed two months later. China policy can change again with little warning.
The design IP part of the business can miss badly on its own. In one recent quarter, design IP revenue fell year over year after a major foundry customer unexpectedly withdrew from a deal Synopsys had already invested in. This part of the business depends on a small number of large, lumpy customer commitments.
- Recent events
- 2026-08-26: Synopsys reported Q3 fiscal 2026 revenue of $2.48 billion, up about 42% from last year, and raised its full-year revenue guidance to $9.69-$9.74 billion.
2025-12-01: Nvidia announced a $2 billion investment in Synopsys stock, as part of an expanded partnership to bring AI into chip design and engineering simulation tools.