Synopses NASDAQ: SNPS is one of the world’s two leading players in the electronic design automation (EDA) industry, along with Cadence Design Systems. NASDAQ: CDNS. The company plays an important role in the development of advanced semiconductor. Without high-quality EDA software, making high-quality semiconductor designs is almost impossible.
Despite Synopsys’ importance, the stock has struggled to gain momentum as the artificial intelligence boom has taken hold. Since early 2025, Synopsys shares are flat. This comes after the stock fell 8.6% following the company’s latest earnings report.
Although Synopsys shares fell sharply, the analyst’s price target moved in the opposite direction—signaling a potential opportunity for the stock. As the stock continues to underperform, all eyes will be on Synopsys’ investor day in September.
Synopsy Posts Beats and Lifts Guidance, But Ansys Drives Growth
In its Q2 2026 fiscal year, Synopsys posted $2.28 billion in revenue. (Note that Synopsys’ financial reporting period is slightly earlier than the standard reporting period used by most companies.) This equates to 42% year-over-year (YOY) revenue growth and exceeded estimates of $2.25 billion.
However, much of this growth was not organic but a product of Synopsys’s Ansys acquisition. According to the earnings call, growth would have been 3% to 4% YOY excluding Ansys.
Meanwhile, Synopsys’ adjusted earnings per share (EPS) fell nearly 9% YOY to $3.35, significantly beating estimates of $3.15. This figure is deceptive as well, as despite the decline in EPS, adjusted net income rose 11% YOY. The difference came as Synopsys’s stock count rose nearly 23% YOY.
Synopsys issued a large number of shares to finance the Ansys deal, and NVIDIA directly NASDAQ: NVDAinvested $2 billion in Synopsy. Long story short, Synopsys’ adjusted profit rose, although it fell on a per-share basis.
Synopsys also raised its full-year guidance on several fronts. Based on average values:
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Revenue guidance increased by $65 million to $9.665 billion.
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Adjusted operating margin guidance increased 50 basis points to 41%.
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Adjusted EPS guidance rose 34 cents to $14.76.
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Free cash flow guidance increased by $100 million to $2 billion.
Despite strong postings across most of the title’s metrics, investors are likely to view the fact that Ansys drove almost all of Synopsys’ growth as a negative.
Analysts Raise Targets as Shares Fall
Synopsys Stock Forecast Today
$563.81
17.74% changedHold on
Based on 17 Analyst Ratings
| Current Price | $478.87 |
|---|---|
| High Forecast | $650.00 |
| Average prediction | $563.81 |
| Low Prognosis | $450.00 |
Synopsys Stock Forecast Details
After the earnings, MarketBeat tracked several upgrades to analyst price targets on Synopsys, while not seeing any target drops. Among updates for which MarketBeat had previous price target data, the average price target rose about 7%. This was roughly equivalent to the 8.6% shares taken following the report. However, analysts at BNP Paribas Exane set an Underweight rating on the stock, while Piper Sandler issued a Hold rating.
Overall, the average price target among those issued after the dividend was around $538. This is well below MarketBeat’s consensus price target of $564, indicating that the old target is holding the consensus price. The revised estimate of $538 implies an average upside of about 10%.
Synopses and Cadence Assignments Have a Great Time
It’s a bit disappointing to see Synopsys not doing very well in the market. This comes as many semiconductor and AI-related stocks have rallied. Since the beginning of 2025, the S&P 500 has delivered a return of more than 25%. Meanwhile, the iShares Semiconductor ETF NASDAQ: SOXXa widely used proxy for the semiconductor industry’s performance, rose more than 150%.
Near-term problems, such as Ansys’ cloud visibility and problems at Intel’s. NASDAQ: INTC foundry (a key customer), adversely affected Synopsy. However, Cadence—who didn’t face the same problems—didn’t do well either. Cadence shares are up only about 25% since the start of 2025.
Therefore, the top two EDA stocks are experiencing significant underperformance, even as the industry in which they reside improves. This raises questions about their ability to capture value in the same way they have in the past.
Synopsys Investor Day: Its Key Opportunity to Renew Investors
Despite Synopsys’ poor performance, its products continue to be important in the semiconductor ecosystem. Additionally, Ansys’ visibility and Intel’s issues may slip over time.
In its earnings call, Synopsys also said it is looking at ways to capture more value for its products that it offers customers. This includes new ways to price its intellectual property. Synopsys says it will have several customer agreements signed under this type by the end of the fiscal year.
Additionally, as AI agents are increasingly used in chip design, Synopsys is working to capture additional usage-based revenue. However, the company said it will provide more details on these strategies at its Investor Day at the end of September.
The company’s Investor Day will likely be important in convincing the markets that Synopsys can change its monetization strategies in a way that increases the value it captures. Examining its plan is important before materially changing a good long-term thesis on this stock.
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