Cadence Design (CDNS) AI Stock Analysis

• Market Cap: $91.88B
• Dividend Yield: N/A
• Average Volume (3M): 1.94M
• Price to Earnings (P/E): 87.1
• Beta (1Y): 1.48
• Revenue Growth: 19.72%
• EPS Growth: 1.59%
• Country: US
• Employees: 12,837
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.93
• Shares Outstanding: 272,201,000
• 10 Day Avg. Volume: 1,668,896
• 30 Day Avg. Volume: 1,938,501
• PEG Ratio: 99.34
• Price to Book (P/B): 17.44
• Price to Sales (P/S): 17.56
• P/FCF Ratio: 72.89
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 18.40
• Enterprise Value/Gross Profit: 20.95
• Enterprise Value/Ebitda: 53.28
• 1Y Price Target: $379.00
• Price Target Upside: 12.29% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 7.06
• Revenue Forecast (FY): $5.28B

• Rating: 69 Neutral
• Price Target: $332.00 ▼(-1.64% Downside)

Cadence Design's strong financial performance and positive earnings call outlook are significant strengths, driving the overall score. However, bearish technical indicators and a high P/E ratio suggest caution. The absence of a dividend yield and geopolitical risks in China further temper the stock's attractiveness.

Positive Factors

Revenue Growth

Raising the revenue growth outlook indicates strong demand and effective execution, which supports long-term business expansion.

Strategic Acquisitions

The acquisition enhances Cadence's multiphysics portfolio, strengthening its market position and expanding capabilities in SDA.

AI and Partnerships

Strong partnerships in AI position Cadence as a leader in innovation, driving growth across various industries and securing competitive advantage.

Negative Factors

Free Cash Flow Decline

A decline in free cash flow growth may limit the company's ability to reinvest in growth opportunities and manage financial obligations.

China Market Volatility

Geopolitical tensions in China could disrupt operations and affect revenue from a key market, posing a risk to sustained growth.

OpEx Timing Concerns

Unexpected OpEx increases can pressure margins and affect profitability, impacting financial performance in the near term.

Cadence Design Business Overview & Revenue Model

Company Description

Cadence Design Systems (CDNS) is a global leader in electronic design automation (EDA) software and engineering services, primarily serving the semiconductor and electronics industries. The company provides a comprehensive suite of tools that facilitate the design and verification of integrated circuits (ICs), systems on chips (SoCs), and printed circuit boards (PCBs). Cadence's core offerings include simulation, synthesis, physical design, and verification solutions, which are essential for engineers in the development of complex electronic systems.

How the Company Makes Money

Cadence Design generates revenue primarily through the sale of software licenses, maintenance, and support services. The company's revenue model includes both perpetual licenses and subscription-based licensing, allowing customers to choose their preferred payment structure. Key revenue streams consist of software sales, professional services, and training related to their products. Additionally, Cadence engages in partnerships with semiconductor companies and technology firms, which not only enhances its product offerings but also expands its customer base. The company benefits from recurring revenue through maintenance contracts, which provide ongoing updates and support to clients, thus ensuring a stable income stream.

Cadence Design Financial Statement Overview

Summary

Cadence Design exhibits strong financial health with consistent revenue growth and profitability. The balance sheet is stable with moderate leverage, and cash flows are generally robust despite recent declines in free cash flow growth. The company is well-positioned in the software application industry, but should monitor cost pressures and cash flow trends.

Income Statement

Cadence Design has demonstrated consistent revenue growth with a TTM revenue growth rate of 2.42%. The company maintains strong profitability with a gross profit margin of 85.39% and a net profit margin of 19.88% in the TTM period. However, there is a slight decline in margins compared to previous years, indicating potential cost pressures.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 0.49, indicating a balanced approach to leveraging. The return on equity is robust at 21.28%, reflecting efficient use of equity. However, the equity ratio stands at 68.77%, suggesting a reliance on equity financing.

Cash Flow

The cash flow statement reveals a decline in free cash flow growth by 6.72% in the TTM period, which could be a concern. The operating cash flow to net income ratio is healthy at 1.15, indicating strong cash generation relative to net income. The free cash flow to net income ratio is also solid at 0.92.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.21B	4.64B	4.09B	3.56B	2.99B	2.68B
Gross Profit	4.58B	3.99B	3.65B	3.19B	2.68B	2.38B
EBITDA	1.80B	1.67B	1.46B	1.20B	916.12M	803.63M
Net Income	1.06B	1.06B	1.04B	848.95M	695.96M	590.64M
Balance Sheet
Total Assets	9.60B	8.97B	5.67B	5.14B	4.39B	3.95B
Cash, Cash Equivalents and Short-Term Investments	2.75B	2.78B	1.14B	886.82M	1.09B	928.43M
Total Debt	2.48B	2.59B	764.41M	887.41M	454.71M	460.71M
Total Liabilities	4.40B	4.30B	2.27B	2.39B	1.65B	1.46B
Stockholders Equity	5.20B	4.67B	3.40B	2.75B	2.74B	2.49B
Cash Flow
Free Cash Flow	1.48B	1.12B	1.25B	1.12B	1.03B	810.11M
Operating Cash Flow	1.62B	1.26B	1.35B	1.24B	1.10B	904.92M
Investing Cash Flow	-411.73M	-837.12M	-412.25M	-738.63M	-292.95M	-292.16M
Financing Cash Flow	-1.25B	1.24B	-803.57M	-657.05M	-643.79M	-415.29M

Cadence Design Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 337.53
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDNS, the sentiment is Positive. The current price of 337.53 is above the 20-day moving average (MA) of 315.39, above the 50-day MA of 329.33, and above the 200-day MA of 311.24, indicating a bullish trend. The MACD of -0.26 indicates Negative momentum. The RSI at 63.36 is Neutral, neither overbought nor oversold. The STOCH value of 94.08 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CDNS.

Cadence Design Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADSK	77 Outperform	$65.03B	59.55	40.33%	―	15.62%	2.59%
CDNS	69 Neutral	$91.88B	87.10	21.74%	―	19.72%	1.59%
TYL	66 Neutral	$20.19B	65.35	9.17%	―	10.62%	31.43%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
HUBS	61 Neutral	$19.90B	―	-0.20%	―	19.21%	75.32%
MSTR	57 Neutral	$51.43B	8.32	25.59%	0.08%	1.65%	―
SNOW	54 Neutral	$79.54B	―	-53.32%	―	28.48%	-19.12%

Cadence Design Corporate Events

Cadence Design Systems’ Earnings Call Highlights Robust Growth

Cadence Design Systems’ recent earnings call painted a picture of robust financial health and strategic advancements, particularly in the realms of AI, IP, and hardware. Despite facing some geopolitical uncertainties in China and timing issues related to operating expenses, the overall sentiment was optimistic, with the company poised for substantial growth opportunities.

Cadence Design Systems Reports Strong Q3 2025 Results

Cadence Design Systems, a leader in AI and digital twin technologies, specializes in computational software for engineering design across various sectors. The company reported strong third-quarter 2025 financial results, with revenue reaching $1.339 billion, up from $1.215 billion the previous year, and a record backlog of $7.0 billion. Key financial highlights include a GAAP operating margin of 31.8% and a non-GAAP diluted net income per share of $1.93. Cadence also completed strategic acquisitions to enhance its product portfolio, including the Arm Artisan foundation IP and a definitive agreement to acquire Hexagon’s D&E business. Looking ahead, Cadence has raised its 2025 revenue growth outlook to approximately 14% year-over-year, reflecting confidence in its strategic positioning and ongoing business momentum.

Cadence Design Acquires Hexagon Smart Solutions Unit

On September 4, 2025, Cadence Design Systems announced an agreement to acquire the design and engineering business of Hexagon Smart Solutions for €2.70 billion. The acquisition, expected to close in the first quarter of 2026, will be funded through cash and stock, with regulatory approvals being a key condition for completion.

The most recent analyst rating on (CDNS) stock is a Buy with a $395.00 price target. To see the full list of analyst forecasts on Cadence Design stock, see the CDNS Stock Forecast page.