Synopsys Raises Annual Forecasts as AI Complexity Drives Chip Design Software Demand

Synopsys raises annual forecasts on AI-driven chip design software demand

Aug 26 (Reuters) - Synopsys (SNPS.O), opens new tab on Wednesday raised its annual revenue and profit forecasts, as the AI boom drives investments in chips and infrastructure, boosting demand for the firm's chip design software. AI-related design demand has risen sharply as chipmakers invest in more advanced semiconductor systems, while tech giants, including Amazon (AMZN.O), opens new tab and Alphabet (GOOGL.O), opens new tab, ramp up in-house chip efforts as well. Here are more details on the results: Reporting by Deborah Sophia in Bengaluru; Editing by Vijay Kishore Our Standards: The Thomson Reuters Trust Principles., opens new tab

Synopsys Posts Q3 Beat On Strength In EDA, Growing Interest In Agentic AI - Synopsys (NASDAQ:SNPS)

Shares of Synopsys Inc (NASDAQ:SNPS) rallied in early trading on Thursday, after the company reported upbeat fiscal third-quarter results. Here are some key analyst takeaways: * Rosenblatt Securities analyst Blair Abernethy reiterated a Buy rating and price target of $410. * Needham analyst Charles Shi reiterated a Buy rating and price target of $580. * Benchmark analyst Gary Mobley maintained a Buy rating and price target of $570. Check out other analyst stock ratings. Rosenblatt Securities: Synopsys posted solid quarterly results, exceeding the high end of its revenue, margin, and earnings guidance ranges, Abernethy said in a note. Revenue grew 42% year-on-year to $2.48 billion, with upside being driven by contribution from the Ansys acquisition and outperformance in Design Automation, he added. Management indicated that the Ansys acquisition is tracking ahead of cost synergy expectations at the time of the deal, the analyst noted. The company's updated revenue guidance for the full year reflects 38% growth, with Ansys contributing around $2.98 billion and growing 9.5% in the fourth quarter, he further stated. Needham: Synopsys' revenue grew 9% sequentially, with Electronic Design Automation (EDA) up 10% and Ansys growing 9%, Shi said. Design automation posted record hardware revenue, he added. Trending "For Ansys, semiconductors, aerospace and industrial were particularly strong as these industries continued to upgrade their digital engineering capabilities," the analyst wrote. For the fiscal fourth quarter, management guided to revenue of $2.56 billion, representing 3% sequential growth, with EDA expected to resume double-digit year-on-year growth, he further stated. Benchmark: Given that Synopsys' stock already reflected a negative revision to estimates, it was surprising that it came under pressure following the release of results, Mobley said. He added that this reaction was particularly unexpected since: * The company delivered a clean beat-and-raise quarter * The results were a validation that "AI is a tailwind to EDA/simulation software," rather than a headwind The analyst highlighted the following from the print: * Strong chip design activity resulted in upside to the company's core EDA business * Growing interest in its agentic AI workflows * Ansys business is performing better than expected The midpoints of management's fourth-quarter revenue and earnings guidance of $2.555 billion and $4.13 per share came in ahead of consensus estimates of $2.552 billion and $4.00 per share, he further stated. SNPS Price Action: Shares of Synopsys had risen by 8.79% to $446.02 at the time of publication on Thursday. Tech Synopsys Boosts Annual Outlook as AI Complexity Drives Demand Synopsys reported strong third-quarter results, with revenue up 42%, AI-driven demand accelerating and FY2026 revenue and EPS guidance raised. 2 min read Read this article Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Synopsys Boosts Annual Outlook as AI Complexity Drives Demand - Synopsys (NASDAQ:SNPS)

On Wednesday, Synopsys, Inc. (NASDAQ:SNPS) reported strong third-quarter results and raised outlook. During the call, CEO Sassine Ghazi said AI is creating unprecedented complexity and driving stronger demand for the silicon IP and engineering solutions needed to build next-generation AI computing, infrastructure and physical AI systems. The company reported adjusted EPS of $3.91, beating the analyst consensus estimate of $3.67, according to Benzinga Pro data. Revenue rose 42% year over year to $2.48 billion, topping the $2.44 billion Street estimate. The company cited broad-based strength across EDA, Ansys and design IP. Free cash flow was $746 million, with $3.6 billion in cash and short-term investments against about $10 billion of debt. Tech EXCLUSIVE: Synopsys Says the AI Assistant Era Is Already Ending Synopsys says AI is evolving beyond assistants into autonomous engineering systems that manage end-to-end workflows. 3 min read Read this article Business Performance Ansys contributed about $711 million in revenue, and management said the business continued to perform strongly a year after the acquisition. Trending EDA revenue grew 8.5% year over year, driven by strong software performance and a record quarter for hardware-assisted verification, with double-digit growth expected in the fourth quarter and full-year 2026. Also, Design IP revenue grew 11% to $474 million, with a 26.5% adjusted operating margin. The business won more than 95% of PCIe 7 opportunities and secured 25 LPDDR6 design wins year to date. Die-to-die IP revenue is on track to double year over year, with more than 100 design wins, while Synopsys maintained a 90%+ automotive design win rate for three straight quarters as ADAS platforms transition to 5nm and 3nm technologies. USB IP Lifetime Bookings Crossed $2 Billion Synopsys' USB IP bookings surpassed $2 billion, with tier-one wins advancing to leading-edge nodes. Its new Multiphysics Fusion solution delivered up to 10x faster design closure and 3x faster runtime in customer validation, with revenue contributions expected from 2027. The third quarter backlog stood at $10.9 billion. The company has over 30 agentic AI engagements, with its verification agent achieving up to 50x faster validated RTL, 20% better coverage and up to 40% shorter debug cycles. Synopsys added 12 new and 66 repeat hardware-assisted verification customers in the third quarter. Guidance Boost Synopsys expects fourth quarter adjusted EPS of $4.10-$4.16 and revenue of $2.53 billion-$2.58 billion, compared with estimates of $4.00 and $2.552 billion, respectively. The company raised its fiscal year 2026 adjusted EPS guidance to $15.04-$15.10 from $14.72-$14.80 and revenue guidance to $9.69 billion-$9.74 billion from $9.625 billion-$9.705 billion, versus estimates of $14.76 and $9.68 billion. Synopsys projects Ansys revenue contribution of $2.98 billion in the full year. SNPS Price Action: Synopsys shares were up 0.24% at $411.00 during premarket trading on Thursday, according to Benzinga Pro data. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Synopsys Says the AI Assistant Era Is Already Ending - Synopsys (NASDAQ:SNPS)

Artificial intelligence has spent the past two years becoming a better assistant. Synopsys, Inc. (NASDAQ:SNPS) believes the next phase is something fundamentally different: AI that no longer assists engineers, but increasingly manages entire engineering workflows on its own. In an exclusive email interview with Benzinga, Synopsys Chief Product Development Officer Shankar Krishnamoorthy said investors should look beyond today's AI copilots and task-specific assistants. The more important shift, he said, is the emergence of autonomous engineering -- a transition that could reshape how semiconductors and other complex products are designed. Synopsys Says AI Is Moving Beyond Copilots For much of the generative AI boom, software companies have focused on AI assistants that help users complete individual tasks. Krishnamoorthy believes that phase is already giving way to something more ambitious. "The most important trend to watch is the transition from AI-assisted to autonomous engineering," he told Benzinga. Rather than helping engineers solve isolated problems, AI is beginning to coordinate entire product development workflows. According to Krishnamoorthy, "AI will orchestrate end-to-end engineering workflows across design, verification, simulation, and system validation." That marks a significant shift in how AI creates value. Instead of acting as another software tool inside an engineer's workflow, autonomous AI increasingly becomes the workflow itself, coordinating multiple stages of product development while allowing engineers to focus on higher-value innovation. Tech Nvidia's $2 Billion Synopsys Bet Signals AI's Next Frontier Synopsys says Nvidia's $2 billion investment reflects a shared vision for AI-powered engineering and simulation. 3 min read Read this article Autonomous Engineering Could Become the Next Competitive Advantage The transition is being driven by a growing engineering challenge rather than advances in AI alone. As chip designs and intelligent systems become more sophisticated, Krishnamoorthy said engineering teams are managing unprecedented complexity across hardware, software and physics. In response, "organizations are moving beyond point solutions and task-specific AI assistants toward autonomous engineering workflows that can help manage this complexity at scale." That evolution, he said, will ultimately separate industry leaders from the rest. "The companies that successfully combine agentic AI, accelerated computing, and multiphysics simulation will be best positioned to improve engineering velocity, deliver first-time right silicon, and advance innovation." While "first-time right silicon" is an industry term for producing a chip that works correctly without costly redesigns, the broader message is straightforward: companies that can automate more of the engineering process may be able to innovate faster while reducing development costs and delays. Markets OpenAI Warns Autonomous AI Agents Could Learn To Bypass Safeguards OpenAI temporarily halted internal access to a long-running AI model after testing revealed unexpected behavior. 3 min read Read this article Why Investors Should Watch Autonomous Engineering The AI conversation has largely centered on chatbots, coding assistants and productivity software. Synopsys argues the next competitive battleground lies deeper inside enterprise engineering, where AI is evolving from an assistant into an orchestrator. That shift is particularly relevant as Synopsys is set to report earnings after the market closes Wednesday. Investors will be looking not only for evidence that demand for AI-enabled engineering software remains strong, but also for signs that customers are adopting more autonomous workflows rather than standalone AI features. If Synopsys' vision proves correct, the next winners in AI may not simply be the companies building more capable models. They could be the companies embedding those models into end-to-end engineering systems that redesign how products are conceived, tested and brought to market. General AI Could Make Biology Programmable, Expert Says Generate Biomedicines says AI could make biology programmable by generating and testing drug hypotheses at machine scale. 1 min read Read this article Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Synopsys Says AI Is Already Delivering 6X Productivity Gains - Synopsys (NASDAQ:SNPS)

Much of the conversation around artificial intelligence still revolves around what it could do for chip design. Synopsys, Inc. (NASDAQ:SNPS) says that the future may already be here. In an exclusive email interview with Benzinga, Synopsys Chief Product Development Officer Shankar Krishnamoorthy shared rare quantitative evidence of AI's real-world impact, saying customers are already reporting productivity gains of up to six times while autonomous engineering workflows are reducing tasks that once took weeks to just hours. * What should traders watch with SNPS? Synopsys Says Agentic AI Is Delivering Measurable Productivity Gains Technology companies often describe AI in broad terms, but Synopsys backed its claims with specific performance metrics. Krishnamoorthy said, "One of our customers is observing a 5x-6x productivity gain using our agentic flow for formal verification." Beyond accelerating work, the AI-driven workflow also improved outcomes by identifying "a bug, which pointed to a persistent modeling issue that traditional tools had not identified," added Krishnamoorthy. The findings suggest AI is doing more than automating repetitive engineering tasks. It is also helping engineers uncover problems that conventional verification methods can miss, potentially reducing costly design iterations later in the development process. That shift is becoming increasingly important as semiconductor designs grow more complex and verification consumes a larger share of engineering time. Tech EXCLUSIVE: Nvidia Is Helping This AI Company Get 'Better Intelligence Per Dollar' This AI company is using Nvidia technology to make its healthcare AI more efficient. DigitalOcean CEO sees better "intelligence per dollar". 3 min read Read this article AI Is Compressing Weeks of Engineering Into Hours Synopsys also pointed to early results from its autonomous debugging workflow, developed in collaboration with Microsoft Discovery. According to Krishnamoorthy, early evaluations have shown "reductions of 25%-40% in debug cycle time," "saving many weeks of engineering efforts and improving productivity." He added that the company's end-to-end autonomous verification workflow "compresses weeks of manual labor into hours of agentic execution," helping address one of the industry's biggest engineering bottlenecks. Rather than replacing engineers, Krishnamoorthy said AI is enabling them to focus on higher-value work by automating complex tasks, orchestrating end-to-end workflows and exploring more design alternatives before a chip reaches production. The broader implication is that AI's value may ultimately be measured less by how quickly it generates code and more by how much engineering time it eliminates across the product development cycle. Why Investors Should Watch Productivity, Not Just AI Adoption As AI spending accelerates across the semiconductor industry, investors are increasingly asking whether those investments are producing measurable returns. Synopsys' customer examples offer an early answer. Instead of discussing AI as a future productivity tool, the company says customers are already reducing debug cycles by as much as 40%, completing engineering workflows in hours rather than weeks and achieving productivity gains of up to six times. For investors, the next milestone to watch is whether these early results become commonplace across the semiconductor industry. Synopsys is scheduled to report earnings after the market closes Wednesday, giving investors a timely opportunity to assess whether demand for its AI-enabled design and verification tools is translating into broader financial momentum. If autonomous engineering continues to deliver measurable improvements in productivity, quality and time-to-market, AI could become as important to designing the next generation of chips as it has been to powering them. Analyst Ratings Synopsys Q3 Preview: 40% Revenue Growth On AI Products, Ansys Acquisition SNPS shares jump ahead of Q3 results on Aug 26. Analyst reiterates Buy rating. Expects company to post in-line results. 2 min read Read this article Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Nvidia's $2 Billion Synopsys Bet Signals AI's Next Frontier - NVIDIA (NASDAQ:NVDA), Synopsys (NASDAQ:SNPS

Nvidia Corp (NASDAQ:NVDA) and Synopsys, Inc (NASDAQ:SNPS) are set to report earnings after the bell Wednesday, putting the companies' financial results in focus as investors assess the impact of their expanding AI partnership. Nvidia's $2 billion investment in Synopsys may signal a bet on something much bigger than electronic design automation (EDA) software. In an exclusive email interview with Benzinga, Synopsys Chief Product Development Officer Shankar Krishnamoorthy said the investment reflects a broader shift toward AI-powered engineering -- one that could eventually change how everything from semiconductors to turbine engines is designed. Nvidia's Synopsys Investment Is a Bet on AI Engineering Krishnamoorthy said the strategic value of Nvidia's investment extends beyond capital, describing it as a reflection of where engineering is headed over the next decade. "The investment reflects a shared vision that the next generation of engineering will be powered by AI, simulation, and holistic system design," he told Benzinga. That vision is already shaping the partnership between the two companies. According to Krishnamoorthy, Synopsys and Nvidia are combining expertise in engineering software and accelerated computing to develop autonomous workflows that help customers tackle increasingly complex design challenges. The collaboration recently produced an end-to-end autonomous verification workflow that, according to Synopsys, "compresses weeks of manual labor into hours of agentic execution," addressing one of the most time-consuming stages of chip verification. The larger objective, however, is not simply to design chips faster. It's to rethink how products are engineered from concept to completion. Markets Perplexity Deal Highlights a Pattern in Nvidia's AI Investments Nvidia's reported Perplexity deal highlights a growing pattern across its AI investments, with portfolio companies building on Nvidia infra. 3 min read Read this article Synopsys Sees AI Replacing Costly Physical Prototypes Krishnamoorthy believes one of the biggest shifts will occur well before products reach the factory floor. "Customers can no longer afford the time and cost of creating and testing physical prototypes of their products, from turbine engines to tennis racquets," he said. Instead, AI models, simulation tools and digital engineering workflows are increasingly allowing companies to validate designs virtually before committing to expensive physical testing. That, according to Synopsys, is why the convergence of AI and engineering matters beyond the semiconductor industry. Krishnamoorthy said combining Synopsys' engineering software with Nvidia's AI infrastructure is helping accelerate "the industry's transition toward AI-powered, silicon-to-systems design and development." The phrase "silicon-to-systems" reflects a broader ambition: using AI not just to optimize individual chips, but to improve the design of complete products by integrating hardware, software and physics into a unified engineering workflow. Why Investors Should Watch AI Engineering, Not Just AI Chips Nvidia has become synonymous with the AI infrastructure boom, but Krishnamoorthy suggests the next phase of growth may be driven by the software that enables engineers to build AI-powered products faster and more efficiently. Rather than viewing the investment as another semiconductor deal, investors may want to see it as a signal that AI is moving deeper into industrial engineering, product development and simulation -- areas that have traditionally relied on lengthy design cycles and costly physical prototypes. If that transition unfolds as Synopsys expects, the biggest winners may not simply be the companies building AI chips, but those enabling an entirely new way of designing products. For investors, the trend to watch is whether AI-powered engineering platforms can translate today's strategic vision into measurable productivity gains and broader enterprise adoption over the next several years. Tech Nvidia's Biggest AI Drug Discovery Contribution Isn't Money Generate Biomedicines co-founder & CTO says Nvidia's biggest contribution to AI drug discovery is technical collaboration, not just capital. 2 min read Read this article Photo via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.