Synopsys (SNPS) stock was up 7.4% in pre-market trading after chip giant Nvidia (NVDA) announced that it purchased $2 billion worth of Synopsys common stock at a price of $414.79 per share. Additionally, the two companies have signed a multiyear partnership aimed at revolutionizing engineering and design.
TipRanks Cyber Monday Sale
- Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
However, NVDA stock was down 1.2% as Seaport Global analyst Jay Goldberg reiterated his Sell rating, setting a price target of $140, implying nearly 21% downside potential.
Synopsys is one of the few electronic design automation (EDA) companies gaining prominence due to its technology’s extensive use in chip design. Nonetheless, SNPS stock is down nearly 14% year-to-date, following the company’s Q3FY25 earnings and sales miss.
Nvidia, Synopsys Disclose Strategic Partnership
The companies stated that their deal will combine Nvidia’s expertise in AI and accelerated computing with Synopsys’ engineering solutions. This collaboration will provide R&D teams with enhanced tools to design, simulate, and verify intelligent products more accurately, quickly, and cost-effectively.
The partnership will span several years, leveraging Nvidia’s CUDA computing, smart AI, and digital twin technology to accelerate simulations beyond the speed of traditional computers, and create new opportunities in engineering fields.
Both companies said their partnership is not exclusive, and they will continue working with other companies in the semiconductor and EDA markets. Nvidia and Synopsys will also work together on marketing and sales efforts, offering solutions for both on-site and cloud use, enabling more engineers to use these technologies.
Commenting on the deal, Sassine Ghazi, president and CEO of Synopsys, said developing advanced smart systems is getting more complicated and expensive, so engineers need solutions that better combine electronics and physics using powerful AI and computing.
Analysts and investors could get more clarity on the deal, when the companies hold a press conference at 10:00 am EST today, to discuss the announcement.
NVDA or SNPS: Which Is the Better AI Stock?
Based on TipRanks’ Stock Comparison Tool, NVDA stock currently has a “Strong Buy” consensus rating, offering a nearly 48% upside potential over the next twelve months.
