Synopsys (SNPS) AI Stock Analysis

• Market Cap: $84.73B
• Dividend Yield: N/A
• Average Volume (3M): 2.49M
• Price to Earnings (P/E): 287.8
• Beta (1Y): 1.59
• Revenue Growth: 12.62%
• EPS Growth: -45.12%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 3.77
• Shares Outstanding: 191,562,030
• 10 Day Avg. Volume: 2,813,784
• 30 Day Avg. Volume: 2,485,646
• PEG Ratio: -1.21
• Price to Book (P/B): 2.57
• Price to Sales (P/S): 10.30
• P/FCF Ratio: 53.88
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 11.45
• Enterprise Value/Gross Profit: 15.24
• Enterprise Value/Ebitda: 34.74
• 1Y Price Target: $535.38
• Price Target Upside: 21.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): 14.43
• Revenue Forecast (FY): $9.62B

• Rating: 66 Neutral
• Price Target: $447.00 ▲(1.06% Upside)
• Action: Reiterated Date: 03/03/26
• Date: Action: Reiterated 03/03/26

The score is driven primarily by strong cash generation and solid underlying financial performance, reinforced by a constructive earnings update (EPS guidance raised, strong backlog and free cash flow, and Ansys integration momentum). These positives are tempered by weak technical trend signals and a high valuation multiple, which increase downside sensitivity if margins or integration execution weaken.

Positive Factors

Robust free cash flow

Strong and growing free cash flow (TTM FCF up ~69% and FCF near reported earnings) provides durable internal funding for R&D, share repurchases, debt repayment and acquisitions. High cash conversion underpins financial flexibility and supports multi‑year strategic investments and shareholder returns.

High gross margins & product leadership

Very high gross margins and strong design automation operating profitability reflect a defensible software/IP business model with pricing power. Technical wins (100% usage on 2nm+ tape‑outs, marquee AI/HPC client wins) reinforce long‑term competitive advantage in cutting‑edge semiconductor toolsets.

Ansys integration and backlog visibility

Material contribution from Ansys and an $11.3B backlog give multi‑quarter revenue visibility and structural cross‑sell potential. Targeted $400M run‑rate revenue synergies and cost synergies imply durable top‑line and margin lift over several years as integration scales and joint solutions monetize.

Negative Factors

Elevated absolute debt

A $10B debt load is a persistent structural risk that can limit strategic flexibility if margins or cash generation weaken. Mixed leverage signals across periods reduce confidence in capital structure trends and increase sensitivity to interest, refinancing and M&A funding costs over the medium term.

Design IP revenue decline & margin pressure

A transitional year for IP with declining revenue and compressed margins creates a multi‑quarter headwind to consolidated profitability. Continued investment to deliver new IP and timing/delivery risk means sustained margin drag until new titles scale and monetize, pressuring segment ROIC.

China and end‑market softness

Geopolitical restrictions, stronger domestic competitors, and softer design starts in consumer, automotive and industrial markets create structural regional and end‑market risks. Reliance on AI/cloud demand concentrates exposure and may leave revenue cyclicality outside AI end markets.

Synopsys Business Overview & Revenue Model

Company Description

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. The company offers Fusion Design Platform that provides digital design implementation solutions; Verification Continuum Platform that provides virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, SATA, MIPI, HDMI, and Bluetooth low energy applications; analog IP, including data converters and audio codecs; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers logic libraries and embedded memories; configurable processor cores and application-specific instruction-set processor tools for embedded applications; IP subsystems for audio, sensor, and data fusion functionality; and security IP solutions. Further, it provides Platform Architect solutions for SoC architecture analysis and optimization; virtual prototyping solutions; and HAPS FPGA-based prototyping systems, as well as a series of tools used in the design of optical systems and photonic devices. Additionally, the company offers security testing, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Mountain View, California.

How the Company Makes Money

Synopsys generates revenue primarily through the sale of software licenses for its EDA tools and related services, which include software support and maintenance, training, and consulting. The company operates on a subscription-based model for many of its products, providing a steady stream of recurring revenue. Additionally, Synopsys earns significant income from its semiconductor IP business, which licenses technology to other companies for use in their chip designs. Strategic partnerships with major technology firms and ongoing investments in research and development further enhance its product offerings, contributing to its financial growth. The company also benefits from the increasing demand for advanced semiconductor solutions driven by trends such as artificial intelligence, automotive automation, and the Internet of Things (IoT).

Synopsys Financial Statement Overview

Summary

Strong overall fundamentals led by high gross margins (~75%) and robust, accelerating free cash flow (TTM FCF up sharply and close to net income). Offsetting this, TTM profitability has softened (net margin down vs. prior annual period) and balance-sheet trend signals are mixed, reducing confidence in leverage/return trajectory.

Income Statement

Revenue has grown steadily over the past several years (roughly 10–15% annually), and profitability remains strong with TTM (Trailing-Twelve-Months) gross margin around 75%. However, margins and earnings quality have softened in TTM versus the last annual period: net margin fell to ~14% from ~19% annually, and operating profitability is also lower than the prior year, suggesting either higher costs, investment ramp, or less favorable mix. Overall: solid growth and high gross profitability, but with a noticeable recent step-down in bottom-line margin.

Balance Sheet

The balance sheet shows very large equity and assets in the latest period, but leverage and capital structure look inconsistent across periods. Annual data shows moderate leverage in 2025 (debt-to-equity ~0.50) versus low leverage in 2022–2024, while TTM (Trailing-Twelve-Months) reports extremely low debt-to-equity (~0.02) despite a high absolute debt balance—this limits confidence in trend interpretation. Returns on equity are positive but modest in the latest period (~4–5%) and well below the unusually high 2023–2024 levels, pointing to reduced profitability on a larger equity base. Overall: appears adequately capitalized, but with mixed leverage signals and weaker recent returns.

Cash Flow

Cash generation is a key strength. TTM (Trailing-Twelve-Months) operating cash flow and free cash flow are both strong, with free cash flow up sharply (about +69% TTM) and free cash flow close to reported earnings (FCF running at ~93% of net income), supporting earnings quality. A watch item is that operating cash flow relative to earnings is not consistently high (coverage ratios in the ~0.4–0.6 range historically and ~0.62 TTM), but the overall level and growth in free cash flow remain very constructive.

Breakdown	TTM	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	8.01B	7.05B	6.13B	5.32B	4.62B	4.20B
Gross Profit	6.02B	5.43B	4.88B	4.29B	3.72B	3.34B
EBITDA	2.64B	2.50B	1.85B	1.56B	1.33B	1.01B
Net Income	1.10B	1.33B	2.26B	1.23B	984.59M	757.52M
Balance Sheet
Total Assets	47.24B	48.22B	13.07B	10.33B	9.42B	8.75B
Cash, Cash Equivalents and Short-Term Investments	2.20B	2.96B	4.05B	1.59B	1.57B	1.58B
Total Debt	10.04B	14.29B	684.46M	677.60M	656.37M	666.77M
Total Liabilities	16.69B	19.90B	4.05B	4.15B	3.86B	3.45B
Stockholders Equity	30.55B	28.33B	8.99B	6.15B	5.52B	5.30B
Cash Flow
Free Cash Flow	2.28B	1.35B	1.28B	1.51B	1.60B	1.40B
Operating Cash Flow	2.44B	1.52B	1.41B	1.70B	1.74B	1.49B
Investing Cash Flow	-15.90B	-15.91B	1.22B	-482.10M	-572.62M	-549.03M
Financing Cash Flow	11.80B	13.39B	-181.30M	-1.20B	-1.12B	-748.75M

Synopsys Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 442.30
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNPS, the sentiment is Neutral. The current price of 442.3 is above the 20-day moving average (MA) of 431.60, below the 50-day MA of 467.69, and below the 200-day MA of 493.93, indicating a neutral trend. The MACD of -9.20 indicates Negative momentum. The RSI at 49.81 is Neutral, neither overbought nor oversold. The STOCH value of 56.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SNPS.

Synopsys Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADBE	74 Outperform	$115.65B	19.13	55.43%	―	10.53%	34.24%
FTNT	72 Outperform	$62.46B	31.84	135.72%	―	14.78%	22.52%
PANW	72 Outperform	$133.14B	71.18	16.26%	―	15.30%	-60.71%
ZS	66 Neutral	$26.04B	-232.70	-3.56%	―	23.24%	-8.83%
SNPS	66 Neutral	$84.73B	287.80	5.55%	―	12.62%	-45.12%
ORCL	65 Neutral	$444.88B	23.45	70.60%	1.00%	11.08%	29.56%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Synopsys Corporate Events

Synopsys Launches $250 Million Accelerated Share Repurchase

On March 2, 2026, Synopsys announced it had entered into a $250 million accelerated share repurchase agreement with The Bank of Nova Scotia to buy back its common stock. The move underlines the company’s capital return strategy and could signal confidence in its valuation, with implications for earnings per share and shareholder returns.

Under the agreement, Synopsys is set to receive an initial delivery of about 513,000 shares, with the final number of shares to be determined based on the volume-weighted average price of its stock during the repurchase period, less a discount. Settlement of any remaining shares is expected on or before June 1, 2026, tying the ultimate size of the buyback to market conditions over the coming months.

The most recent analyst rating on (SNPS) stock is a Hold with a $480.00 price target. To see the full list of analyst forecasts on Synopsys stock, see the SNPS Stock Forecast page.

Synopsys Posts Strong Q1 Results, Expands Buyback Program

On Feb. 25, 2026, Synopsys reported first-quarter fiscal 2026 revenue of $2.409 billion, up from $1.455 billion a year earlier, with GAAP EPS of $0.34 and non-GAAP EPS of $3.77, both at or above guidance. Management highlighted strong execution, an AI-driven uplift in system-level and semiconductor R&D demand, and reiterated full-year revenue expectations around $9.61 billion, including a sizable Ansys contribution.

The board also replenished Synopsys’ stock repurchase program, authorizing buybacks of up to $2 billion of common stock, a move that underscores confidence in the company’s growth trajectory and capital-return strategy. Synopsys issued financial targets for the second quarter and full fiscal 2026, signaling continued investment discipline as it seeks to capitalize on an expanded market opportunity and reinforce its competitive position in chip design and systems engineering tools.

The most recent analyst rating on (SNPS) stock is a Hold with a $455.00 price target. To see the full list of analyst forecasts on Synopsys stock, see the SNPS Stock Forecast page.

Synopsys Updates Board as Part of Governance Refresh

On February 14, 2026, Synopsys’ board expanded from eleven to twelve members and appointed former Deloitte executive Peter A. Shimer as an independent director and audit committee member, effective immediately. Shimer, an audit committee financial expert with four decades at Deloitte and current roles at Alaska Air Group and cancer-focused AI initiatives, will receive standard non-employee director compensation, reinforcing Synopsys’ financial oversight as it scales its AI-driven silicon-to-systems platform.

In a related February 19, 2026 announcement, Synopsys said it would not renominate directors Luis Borgen and Dr. Ajei Gopal for re-election, though both will serve until the 2026 annual meeting. The board framed these moves, which come as the Ansys integration progresses, as part of a broader commitment to director refreshment and governance evolution to support the company’s leadership in the growing silicon-to-systems engineering market.

The most recent analyst rating on (SNPS) stock is a Buy with a $560.00 price target. To see the full list of analyst forecasts on Synopsys stock, see the SNPS Stock Forecast page.