- Price
- $412.81 → $425.76(+3.1%)
- Discount
- 20.6% → 18.1%(−2.5 pts)
- Thesis
- Synopsys and one other company, Cadence, control most of the EDA softwareThe market. Few companies can build prices Synopsys at a rival product,discount because chip design tools take decades of engineering to develop, and customers rarely switch. The market may be worriedit worries about the $35 billion Ansys deal and about US-China trade rules. ItThe deal added about $10 billion inheavy debt, and requires the company to integrateintegrating two large engineering software firms at oncecompanies takes years to fully play out. It may also be worried about how fast China tradeExport rules can change, since a Mayfor China have already changed once in 2025 export restriction forced a guidance cut within months, and could change again with little warning. Both worries are about execution riskFor the gap to close, not about whether engineers willSynopsys must keep needing this softwarelowering its debt. Nvidia's decision to invest $2 billion inIt must also show real margin gains from combining Synopsys and Ansys tools. It must avoid another sudden China export shock like the one in DecemberMay 2025, to help build. Synopsys raised its full-year fiscal 2026 revenue guidance again in August 2026 after a strong Q3. Wall Street firms including Wells Fargo and Morgan Stanley raised their price targets in September 2026 on AI-driven chipdemand for design tools together,software. Synopsys is a sign that a large customer seesexpected to report fiscal Q4 2026 results around late November 2026. That report should show whether the combined company's roadmap as credibleguidance raise holds and whether Ansys integration savings are on track. If debt keeps falling and no new export shock hits, the discount can close over the next three to five quarters. A fresh China trade restriction would likely delay that.
- Recent events
- 2026-09-10: Wells Fargo upgraded Synopsys to Overweight from Equalweight and raised its price target to $475 from $450. Morgan Stanley had upgraded Synopsys to Overweight on September 8, with a $500 price target, both citing AI-driven demand for chip design software after Synopsys's fiscal Q3 2026 earnings beat and guidance raise.
2026-09-01: Synopsys expanded its collaboration with TSMC, adding agentic AI design workflows, advanced-node certification, and multi-die system support to the partnership.
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.