Synopsys: Agentic AI-Driven EDA Growth and Margin Expansion Support Reiterated Buy Rating

Citi analyst Kelsey Chia reiterated a Buy rating on Synopsys today and set a price target of $580.00.

Kelsey Chia has given his Buy rating due to a combination of factors that highlight Synopsys’s strong growth prospects and improving profitability profile. He expects the company’s core design automation business to sustain double-digit growth, supported by rising adoption of agentic AI design workflows, deeper integration with Ansys solutions, and the rollout of GPU-accelerated capabilities. These technology and product advances underpin a shift toward value-based pricing, which should allow Synopsys to capture more of the economic value it creates for semiconductor customers and expand margins over time.
Kelsey Chia also points to the planned transition of the IP segment toward a royalty-driven model by 2026, which is anticipated to structurally lift margins as customized IP demand grows. In addition, current guidance does not include potential upside from Intel Foundry, so any progress there would be additive to revenue and profitability, especially as IP margins recover from temporarily depressed levels. As operating margins move toward the mid‑40% range, Kelsey Chia believes the stock’s valuation multiple can re-rate higher even from its current level. Based on these drivers and a valuation anchored at 32x FY27 EPS with a $580 price target, he maintains Synopsys as his preferred name in the EDA space and reiterates a Buy recommendation.