Synopsys (SNPS) stock is in the spotlight after Nvidia (NVDA) revealed a $2 billion investment in the chip-design software company. The funding is part of a new, long-term partnership to build AI-powered chip and product-design tools for major industries. Following the announcement, SNPS stock surged nearly 5% on Monday, gaining another 2% as of this writing on Tuesday. Investors are now wondering whether the partnership is strong enough to make Synopsys stock a buy at today’s levels.
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For context, Synopsys builds advanced chip-design software that helps companies create faster, smarter semiconductors. Its tools are widely used in areas like AI, connected cars, smartphones, and cloud computing to design and test complex hardware.
What Lies Ahead for Synopsys?
Investors welcomed Nvidia’s announcement, seeing it as a boost for Synopsys’ position as a leading chip-design software company, crucial for the future of AI chip development. Notably, Nvidia CEO Jensen Huang said, “This is a huge deal, and this partnership is about changing one of the most compute-heavy industries, design and engineering.”
By strengthening its partnership with Nvidia, Synopsys could see faster revenue growth, wider use of its tools, and stronger long-term competitiveness. The deal also connects Synopsys to one of the fastest-growing AI companies, boosting confidence that demand for its chip-design tools will stay strong.
Wall Street Backs SNPS Stock
Following the deal, analyst Lee Simpson at Morgan Stanley reiterated his Buy rating on SNPS stock with a price target of $510. Simpson believes this partnership strengthens Synopsys’ lead in the EDA (Electronic Design Automation) market, tying it closely to the top AI computing platform and making it harder for competitors to catch up.
He added that Synopsys’ main EDA business is expected to stay strong, helped by solid demand for products like Zebu and HAPS. He stated that while the company faces some challenges, including headwinds in China, its overall FY26 sales are projected around $9.6–$9.7 billion, with EPS of $14–$15.
Simpson noted that the company saw some ups and downs recently—including softer results in part of its Design IP business. However, the acquisition of Ansys (closed in July) could drive meaningful sales, with estimates of about $3 billion in new revenue expected next year.
Is Synopsys a Good Stock to Buy Now?
According to TipRanks, SNPS stock has a Moderate Buy consensus rating based on 12 Buys, three Holds, and two Sells assigned in the last three months. At $554.41, the Synopsys’ average share price target implies a 26.5% upside potential.
Year-to-date, SNPS stock has gained roughly 10%.
