- 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 July 2025, Synopsys bought Ansys, a maker of engineering simulation software, adding tools that test how a product performs before it is built. To get approval for that purchase, Synopsys sold its optical software business and the Ansys PowerArtist tool to Keysight in October 2025. In June 2026, it sold its processor IP business to GlobalFoundries.
- Thesis
- The market prices Synopsys at a discount because it worries aboutof the debt from the $35 billion Ansys dealpurchase and aboutbecause of US-China trade export rules for China. The dealpurchase added heavyabout $10 billion of debt, and integratingthe combination of two large engineering software companies takes years to fully play out. Export rules for China have already changed once inIn May 2025, a US export rule stopped sales of chip design software to China for about five weeks, and could change againa rule like it can come back with little warning. The design IP business also missed badly in 2025 and is still the weakest part of the company. For the gap to close, Synopsys must keep lowering its debt falling while it buys back stock. It must also show realdeliver the margin gains from combining Synopsys and Ansys toolsthat it promised: a non-GAAP operating margin of about 44% in fiscal 2027 and about 50% in fiscal 2030. ItAnd it must avoid another suddena new China export shock like the one in May 2025. Synopsys raisedAt 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 inInvestor Day on September 30, 2026 on AI-driven demand for design software., Synopsys isgave fiscal 2027 guidance above what analysts expected to report, and the stock rose about 13% the next day. The next tests are the fiscal Q4 2026 results around late November 2026. That report should show whether, expected in early to mid December 2026 with the first formal fiscal 2027 guidance raise holds, the fiscal Q1 2027 report around February 2027, and whether Ansys integration savings arethe repayment of the first $1.0 billion of notes on trackApril 1, 2027. If debt keeps fallingthe margin plan holds and no new export shock hits, the discount can close over the next three to five quarters. A freshnew China trade restriction would likely delay that.
- 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.
InOn May 29, 2025, a newthe US export rule briefly barred EDA softwareCommerce Department told Synopsys to stop sales of chip design software to China. Synopsys pulledsuspended its guidance and cut its earnings forecast beforeon the same day. The US lifted the rule was reversed two monthson July 2, 2025, about five weeks 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 quarterQ3 fiscal 2025, reported on September 9, 2025, design IP revenue fell about 8% from a year over year afterearlier, partly because of problems at a major foundry customer unexpectedly withdrew from a deal Synopsys. The stock fell about 36% the next day. In the first nine months of fiscal 2026, the Design IP segment had already invested inan adjusted operating margin of 22.6%. This part of the business depends on a small number of large, lumpy customer commitments.
- Balance sheet
- Cash: $3.6B
Debt: $10.0B
Net debt: $6.4B
Interest cover: 4.78×
Undrawn credit line: $850M, to December 2027
Debt due within 12 months: $1.0B
Last debt due: 2055
Ratings: Moody's Baa1 (stable outlook), S&P BBB (stablepositive outlook)
Synopsys borrowed to buy Ansys in July 2025. GoodwillAt July 31, 2026, goodwill of $26.8 billion and intangible assets from the deal areof $11.5 billion were larger than total equity of $31.2 billion, so the value of the balance sheet depends on Ansys earning its price. AllAlmost all of its remainingthe debt is $10.0 billion of unsecured fixed-rate senior notes that the parent company issued. At July 31, 2026, this wasThese are six series of senior notes at 4.55% to 5.70%, all due fromon April 1, from 2027 to 2055. The first $1.0 billion due within 12 months is due on April 1, 2027, and the next $1.0 billion on April 1, 2028. Synopsys has already repaid all $4.3 billion of floating-rate term loans from the deal by the first quarter of fiscal 2026. $2.0 billion that Nvidia paid for new shares in December 2025 helped this. About $1.7 billion of the cash was outside the US. Interest cover is operating income plus amortization and depreciation of $2.0 billion over interest expense of $429 million, in the nine months to July 31, 2026. The ratings areMoody's rating is from the March 2025 note issue. On July 23, 2026, S&P kept its BBB rating and changed its outlook to positive because debt fell quickly. On October 5, 2026, Synopsys started a $1 billion accelerated share repurchase, so about $1 billion of cash goes to buybacks before the April 2027 notes are due. Synopsys guides fiscal 2027 free cash flow at about $3.1 billion. It and plans to buy back about $1 billion of stock and return up to 50% of free cash flow. Thus debtDebt will now fall more slowly than in the last year.
As of 2026-07-31.
- Checkpoints
- Dec 9, 2026 (estimate): Fiscal Q4 2026 earnings: full-year result and Ansys integration. Pending. Watch: RevenueQ4 revenue inside the raised $2.53 to $2.58 billion guidance, so the year lands in the $9.69 to $9.74 billion range, and fiscal 2027 guidance kept near $11.15 billion pass; a miss or a lower 2027 outlook fails.
Feb 2027 (estimate): Fiscal Q1 2027 earnings: margin progress and buyback pace. Pending. Watch: Non-GAAP operating margin moving toward the 44% fiscal 2027 target and buybacks on plan pass; margin pressure from Ansys costs fails.
Apr 1, 2027: First $1.0 billion of Ansys deal notes fall due. Pending. Watch: Repayment from cash without new borrowing passes; refinancing that keeps gross debt at $10 billion fails the debt reduction test.
- Recent events
- 2026-10-05: Synopsys signed a $1 billion accelerated share repurchase agreement with JPMorgan Chase Bank. Synopsys receives about 1,735,000 shares at the start. Any remaining shares settle on or before January 5, 2027. This is the buyback of about $1 billion that Synopsys announced at its Investor Day.
2026-10-01: Synopsys stock rose about 13%, to $490.54, after the Investor Day. The fiscal 2027 guidance was above the analysts' consensus in LSEG data: revenue of $11.10 to $11.20 billion against $10.81 billion, and non-GAAP earnings per share of $19.04 to $19.12 against $17.81. BofA raised its price target to $600 from $500, and KeyBanc raised its target to $605 from $600.
2026-09-30: At its Investor Day, Synopsys setgave a fiscal 2027 outlook: revenue guidance of about $11.1510 to $11.20 billion at the midpoint, up about 15%, a non-GAAP operating margin of about 44%, and free cash flow of about $3. It1 billion. Its long-term model targets revenue growth of about 15% each year and a non-GAAP operating margin of about 50% in fiscal 2030. Synopsys also announced plans to buy back about $1 billion of its shares and to return up to 50% of free cash flow.
2026-09-30: Synopsys announced a multi-year deal worth over $1 billion with Amazon Web Services, which. AWS will license Synopsys chip design IP and software for its custom chips. ItSynopsys also announced an OpenAIa partnership with OpenAI to build an AI model for chip design, called GPT-Synopsys.
2026-09-23: Synopsys and TSMC expanded their partnership. It adds agentic AI design workflows, certification of Synopsys tools for TSMC's A14 process, and support for multi-die systems.
2026-09-10: Wells Fargo upgraded Synopsys to Overweight from Equalweight and raised its price target to $475 from $450. It named the valuation gap to Cadence and the coming Investor Day. Morgan Stanley had upgraded Synopsys to Overweight on September 8, with a and kept its $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, It named the Ansys integration and multi-die system support to the partnershiprecent fall in the stock price.
2026-08-26: Synopsys reported Q3 fiscal 2026 revenue of $2.48 billion, up about 42% from last year. Most of this growth came from Ansys, andwhich was part of Synopsys for only part of Q3 fiscal 2025. Synopsys raised its full-year revenue guidance to $9.69- to $9.74 billion. On the same day, it raised its estimate of restructuring charges to $425 to $500 million.
2025-12-01: Nvidia announced abought about 4.8 million new Synopsys shares at $414.79 each, for $2 billion investment in Synopsys stock, as part of an expanded partnership to bring AI into chip design and engineering simulation tools.