Synopsys (SNPS) AI Stock Analysis

• Market Cap: $69.06B
• Dividend Yield: N/A
• Average Volume (3M): 1.38M
• Price to Earnings (P/E): 33.0
• Beta (1Y): 1.61
• Revenue Growth: -1.19%
• EPS Growth: 48.33%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 62
• Industry: Software - Infrastructure
• EPS (TTM): 13.52
• Shares Outstanding: 154,620,070
• 10 Day Avg. Volume: 1,143,508
• 30 Day Avg. Volume: 1,384,013
• PEG Ratio: 0.68
• Price to Book (P/B): N/A
• Price to Sales (P/S): 11.42
• Price to Cash Flow (P/CF): -257.10
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $598.27
• Price Target Upside: 33.96% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

Synopsys is a financially sound company with strong profitability and a solid balance sheet, contributing significantly to its overall score. Despite its robust financial standing, technical indicators suggest caution. Valuation is fair, reflecting moderate growth expectations. The recent earnings call highlights strengths in key growth markets, although challenges in certain segments may pose risks.

Positive Factors

AI Integration

By integrating agentic AI into Synopsys’ tools, design engineers can anticipate a more streamlined and efficient EDA workflow.

Hardware Demand

A recent portfolio refresh for hardware is leading to improved demand, contributing positively to growth.

Investment Outlook

Synopsys is viewed as an attractive, yet underappreciated investment opportunity, and the Outperform rating is reiterated.

Negative Factors

China Market

Management downticked the China outlook and now sees China revenue percentage falling this year.

China Revenue Decline

China revenue declined -33% sequentially as management toned down FY25 China expectations to below corporate average growth due to cumulative effect of US-China restrictions and slowing China economy.

Proposed Acquisition

Any potential delay in the proposed Ansys acquisition could likely have a negative impact on the stock.

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, maintenance and service contracts, and consulting services. Its electronic design automation tools and intellectual property products are licensed to semiconductor companies, enabling them to design and verify chip designs more efficiently. Synopsys also earns from its software integrity solutions, which help organizations improve the security and quality of their software code. The company's revenue model includes a combination of time-based licenses, which provide recurring revenue, and upfront perpetual licenses. Additionally, significant partnerships with leading technology companies and continued investment in research and development contribute to Synopsys' earnings by driving innovation and expanding its product offerings.

Synopsys Financial Statement Overview

Summary

Synopsys demonstrates a robust financial performance with a consistent increase in revenue, strong profitability margins, and a solid balance sheet with low leverage. Cash flow is healthy, though there's room for improvement in conversion ratios.

Income Statement

Synopsys demonstrates a robust financial performance with a consistent increase in revenue over the years. The TTM (Trailing-Twelve-Months) gross profit margin is strong at 78.87%, indicating efficient cost management. The net profit margin for the TTM stands at an impressive 34.77%, reflecting superior profitability. However, the recent TTM net income is slightly lower compared to the previous annual period, suggesting a need for attention to sustained profitability growth.

Balance Sheet

The company's balance sheet is solid with a low debt-to-equity ratio of 0.07 in the TTM, indicating a conservative use of leverage. The equity ratio is strong at 71.36%, showing a stable financial structure with ample equity backing. Return on equity (ROE) is excellent at 22.69% in the TTM, showcasing effective management and a high return on shareholder investments.

Cash Flow

Cash flow is healthy with a TTM free cash flow of $1.30 billion, showing the company's ability to generate substantial cash. The operating cash flow to net income ratio is 0.68, which is adequate, though there's room for improvement. Free cash flow growth has been consistent, supporting operational stability and flexibility in funding future growth opportunities.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
6.07B	6.13B	5.84B	5.08B	4.20B	3.69B
	Gross Profit
4.79B	4.88B	4.62B	4.02B	3.34B	2.89B
	EBIT
1.26B	1.36B	1.27B	1.16B	734.79M	620.14M
	EBITDA
1.45B	1.36B	1.65B	1.44B	1.10B	857.40M
	Net Income Common Stockholders
2.11B	2.26B	1.23B	984.59M	757.52M	664.35M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
938.56M	4.05B	1.59B	1.57B	1.58B	1.24B
	Total Assets
3.29B	13.07B	10.33B	9.42B	8.75B	8.03B
	Total Debt
0.00	684.46M	687.80M	656.37M	666.77M	663.49M
	Net Debt
-775.41M	-3.21B	-751.11M	-761.24M	-766.07M	-572.16M
	Total Liabilities
1.19B	4.05B	4.15B	3.86B	3.45B	3.12B
	Stockholders Equity
2.10B	8.99B	6.15B	5.52B	5.30B	4.91B
Cash Flow		Free Cash Flow
1.30B	1.28B	1.51B	1.60B	1.40B	832.55M
	Operating Cash Flow
1.43B	1.41B	1.70B	1.74B	1.49B	991.31M
	Investing Cash Flow
1.26B	1.22B	-482.10M	-572.62M	-549.03M	-360.42M
	Financing Cash Flow
-135.99M	-181.30M	-1.20B	-1.12B	-748.75M	-140.61M

Synopsys Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 446.62
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 446.62 is above the 20-day moving average (MA) of 418.33, above the 50-day MA of 443.71, and below the 200-day MA of 503.90, indicating a neutral trend. The MACD of -4.26 indicates Negative momentum. The RSI at 56.61 is Neutral, neither overbought nor oversold. The STOCH value of 84.90 is Negative, 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
FTNT	76 Outperform	$78.28B	45.04	338.74%	―	12.27%	54.69%
CRWD	76 Outperform	$105.32B	721.64	-0.69%	―	29.39%	-119.62%
PANW	74 Outperform	$118.50B	101.11	23.38%	―	13.86%	-46.44%
ZS	74 Outperform	$33.36B	―	-1.21%	―	27.77%	89.39%
SNPS	73 Outperform	$69.06B	33.02	16.27%	―	-1.19%	48.33%
CYBR	66 Neutral	$17.28B	1,777.39	-5.91%	―	33.10%	-20.31%
Sector *	59 Neutral	$10.72B	10.22	-6.67%	3.02%	7.42%	-11.38%

Synopsys Corporate Events

Synopsys Stockholders Approve Equity Plan Amendments

On April 10, 2025, Synopsys, Inc. held its Annual Meeting of Stockholders, where stockholders approved amendments to the 2006 Employee Equity Incentive Plan and the Employee Stock Purchase Plan. These amendments include increasing the number of shares available for issuance and aligning the plans with current financial practices and policies. The meeting also resulted in the election of nine directors to the board and the ratification of KPMG LLP as the independent accounting firm for the fiscal year ending October 31, 2025. However, a proposal regarding shareholder ratification of golden parachutes was not approved.

Spark’s Take on SNPS Stock

According to Spark, TipRanks’ AI Analyst, SNPS is a Neutral.

Synopsys exhibits strong financial health and promising growth in AI and HPC sectors, yet technical indicators reflect a bearish trend, and valuation metrics suggest overvaluation risks. The earnings call provided mixed insights with robust product launches but highlighted regional challenges, especially in China.

To see Spark’s full report on SNPS stock, click here.