Cadence Design Systems raises annual forecasts as AI chip design demand surges by 24%

Cadence raises annual forecasts as demand booms for AI chip design

July 27 (Reuters) - Cadence Design Systems (CDNS.O), opens new tab raised its annual revenue and profit forecasts on Monday, banking on robust demand for its AI-powered chip and system design software. Shares of the company rose more than 5% in extended trading. The company's electronic design automation (EDA) tools are used to design and validate semiconductors and electronic systems. Here are some details: Reporting by Anhata Rooprai in Bengaluru; Editing by Diti Pujara and Sriraj Kalluvila Our Standards: The Thomson Reuters Trust Principles., opens new tab

Cadence raises annual forecasts as demand booms for AI chip design

Cadence now expects 2026 revenue to be ⁠between $6.26 billion and $6.34 billion, up from its prior projection of $6.13 billion to $6.23 billion. Demand has risen sharply for Cadence's software as chipmakers and technology companies develop increasingly sophisticated systems-on-chip (SoCs) and AI accelerators. Cadence Design Systems raised its annual revenue and profit forecasts on Monday, banking on robust demand for its AI-powered chip and system design software. Shares of the company rose more than 5% in extended trading. The company's electronic design automation (EDA) tools are used ⁠to ⁠design and validate semiconductors and electronic systems. Demand has risen sharply for Cadence's software as chipmakers and technology companies develop increasingly sophisticated systems-on-chip (SoCs) and AI accelerators. Its customers include AI-chip leader Nvidia and iPhone-maker Apple. Cadence now expects 2026 revenue to be ⁠between $6.26 billion and $6.34 billion, up from its prior projection of $6.13 billion to $6.23 billion. On average, analysts were ⁠expecting annual revenue of $6.21 billion, according to data compiled by LSEG. Annual adjusted profit is expected to be between $8.05 and $8.15 per share, up from its previous forecast of $7.85 to $7.95 and above estimates of $7.96. Earlier in the month, Cadence launched an AI "super agent" called AuraStack that lets engineers describe their goals in plain language and then plans and carries out the work using the company's existing software tools to ⁠lay out and virtually test circuit designs. Cadence's second-quarter revenue rose 24.2% to $1.584 billion, largely in line with estimates. Adjusted profit came in at $2.11 per share, compared with estimates of $2.05. Quarter-end backlog stood at $8.1 billion, with $4.2 billion expected to be recognised as revenue within the next 12 months.

Cadence Design Systems Beats Q2 Estimates, Raises 2026 Outlook - Cadence Design Systems (NASDAQ:CDNS)

* Cadence Design Systems shares are powering higher. Why are CDNS shares rallying? Cadence Design Systems Q2 Highlights Cadence Design Systems reported second-quarter revenue of $1.584 billion, beating analyst estimates of $1.577 billion. The company reported second-quarter adjusted earnings of $2.11 per share, beating estimates of $2.06 per share, according to Benzinga Pro. Total revenue was up about 24% year-over-year, driven by broad-based strength and accelerating demand for AI-driven solutions. The company ended the quarter with a record backlog of $8.1 billion and approximately $1.44 billion in cash and cash equivalents. "Cadence is leading the agentic AI transformation in semiconductor design with a healthy environment. We are uniquely positioned to capitalize on this massive TAM expansion opportunity as the only provider with agentic solutions spanning the full electronic system design flow," said Anirudh Devgan, president and CEO of Cadence Design Systems. Cadence Design Systems guided for third-quarter adjusted earnings of $2.01 to $2.07 per share versus estimates of $1.94 per share. The company raised its full-year revenue guidance from a range of $6.13 billion to $6.23 billion to a new range of $6.26 billion to $6.34 billion, versus estimates of $6.21 billion. Cadence also raised its full-year adjusted earnings guidance from a range of $7.85 to $7.95 per share to an updated range of $8.05 to $8.15 per share, versus estimates of $7.96 per share. Management will discuss the quarter on an earnings call scheduled for 5 p.m. ET. CDNS Shares Pop After Hours CDNS Price Action: Cadence Design Systems shares were up 4.03% in after-hours, trading at $352.25 at the time of publication on Monday, according to Benzinga Pro. Image: Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Cadence Design earnings on deck as AI design tools gain traction By Investing.com

Cadence Design Systems Inc. reports second-quarter earnings Monday after the market close, with analysts expecting the electronic design automation leader to extend a growth streak fueled by surging demand for semiconductor design tools in the artificial intelligence era. Wall Street expects Cadence to post earnings of $2.05 per share on revenue of $1.58 billion for the quarter ended June 30. That would represent year-over-year growth of 24% and 23%, respectively, while marking a sequential improvement from the company's first-quarter results of $1.96 per share and $1.47 billion in revenue. The forecast reflects accelerating momentum as chip designers tackle increasingly complex AI-optimized silicon. Analyst sentiment remains overwhelmingly bullish. Twenty-two of 25 analysts covering the stock rate it a buy, with a consensus price target of $395.94 implying 21% upside from the current $326.24 share price. Recent upgrades underscore confidence in Cadence's positioning: Benchmark initiated coverage July 15 with a buy rating and $450 price target, while Baird and Rosenblatt raised their targets to $415 and $410, respectively, in mid-July. EPS estimates have remained essentially flat over the past 60 days, signaling steady conviction in the company's outlook. What Investors Are Watching Three themes will dominate scrutiny of Cadence's report. First, investors want evidence that the company's AI-powered design tools -- including the recently unveiled AuraStack AI Super Agent for PCB and advanced packaging -- are translating into tangible revenue growth. Benchmark analysts highlighted that AI for design tools could drive "a step-function increase in productivity" for semiconductor developers, a thesis that needs validation in booking trends and customer adoption metrics. Second, the sustainability of Cadence's pricing power remains critical. The company operates within what analysts describe as a duopoly market structure with high barriers to entry, granting it significant leverage as chip complexity escalates. Investors will parse management commentary for signs that this dynamic persists amid debate over whether agentic AI could disrupt or enhance the traditional EDA business model. Third, demand for tools supporting advanced-node chip design -- particularly at the 2-nanometer level -- will be scrutinized. Cadence has expanded foundry partnerships to support cutting-edge process technologies, and any signals about design activity at leading-edge nodes could indicate broader momentum in next-generation semiconductor development. Cadence beat consensus estimates in its April quarter, topping EPS forecasts by 2% and revenue expectations by 1.4%, underscoring a track record of execution. The company's 86% gross margin and duopoly positioning provide financial flexibility even as it invests heavily in AI-native tooling. For a stock trading at 41 times forward earnings and commanding a $90 billion market capitalization, Monday's results will test whether Cadence's premium valuation remains justified by its position at the intersection of AI demand and semiconductor innovation. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.