Synopsys (SNPS) AI Stock Analysis

• Market Cap: $90.97B
• Dividend Yield: N/A
• Average Volume (3M): 2.21M
• Price to Earnings (P/E): 59.3
• Beta (1Y): 1.61
• Revenue Growth: 12.62%
• EPS Growth: -45.12%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 2.90
• Shares Outstanding: 191,318,200
• 10 Day Avg. Volume: 2,691,698
• 30 Day Avg. Volume: 2,206,270
• 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: 0.92
• Enterprise Value/Revenue: 11.92
• Enterprise Value/Gross Profit: 16.31
• Enterprise Value/Ebitda: 32.13
• 1Y Price Target: $561.31
• Price Target Upside: 18.05% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 14.38
• Revenue Forecast (FY): $9.63B

• Rating: 73 Outperform
• Price Target: $532.00 ▲(11.89% Upside)

Synopsys exhibits strong financial performance and positive earnings call sentiment, driven by revenue growth and strategic partnerships. However, technical indicators suggest the stock is overbought, and high valuation metrics indicate potential overvaluation. Challenges in China and the Design IP segment also pose risks.

Positive Factors

Strategic Partnership with NVIDIA

The $2 billion partnership with NVIDIA aims to integrate AI and accelerated computing, enhancing Synopsys' capabilities and opening new market opportunities, which can drive long-term growth and innovation.

Revenue Growth

Strong revenue growth and a substantial backlog indicate robust demand for Synopsys' solutions, supporting sustainable financial performance and market leadership.

Cash Flow Generation

Effective cash generation supports operational and strategic initiatives, providing financial flexibility and stability for future investments and debt repayments.

Negative Factors

Challenges in China Market

Ongoing restrictions and subdued market conditions in China pose risks to Synopsys' revenue growth and market expansion in this key region.

Decline in Design IP Segment

The decline in the Design IP segment indicates challenges in maintaining growth, potentially impacting overall revenue and competitiveness in the semiconductor IP market.

Workforce Reduction

While aimed at enhancing efficiency, workforce reductions can disrupt operations and morale, potentially affecting productivity and innovation in the short to medium term.

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

Synopsys shows strong revenue growth and a solid gross profit margin, although profitability metrics have declined. The balance sheet is robust with moderate leverage, and cash flow generation is healthy. Attention to improving net margins and maintaining cash flow efficiency is crucial.

Income Statement

Synopsys has demonstrated strong revenue growth with a 9.7% increase in the latest year, supported by a solid gross profit margin of 76.98%. However, the net profit margin has decreased to 18.96% from 36.94% in the previous year, indicating some pressure on profitability. The EBIT and EBITDA margins have also shown a decline, suggesting increased operational costs or other expenses impacting earnings.

Balance Sheet

The company's balance sheet shows a healthy equity base with a debt-to-equity ratio of 0.50, indicating moderate leverage. However, the return on equity is not available for the latest year, which limits the assessment of profitability from shareholders' perspective. The equity ratio stands strong, reflecting a stable financial position.

Cash Flow

Synopsys has achieved a positive free cash flow growth rate of 3.59%, indicating effective cash generation. The operating cash flow to net income ratio is not available, but the free cash flow to net income ratio suggests efficient conversion of earnings into cash. The company maintains a robust cash flow position, supporting its operational and strategic initiatives.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	7.05B	6.13B	5.33B	4.62B	4.20B
Gross Profit	5.24B	4.88B	4.10B	3.72B	3.30B
EBITDA	2.62B	1.94B	1.65B	1.33B	1.10B
Net Income	1.34B	2.26B	1.23B	984.59M	757.52M
Balance Sheet
Total Assets	48.22B	13.07B	10.33B	9.42B	8.75B
Cash, Cash Equivalents and Short-Term Investments	2.96B	4.05B	1.59B	1.57B	1.58B
Total Debt	14.29B	684.46M	677.60M	656.37M	666.77M
Total Liabilities	19.90B	4.05B	4.15B	3.86B	3.45B
Stockholders Equity	28.33B	8.99B	6.15B	5.52B	5.30B
Cash Flow
Free Cash Flow	1.35B	1.28B	1.51B	1.60B	1.40B
Operating Cash Flow	1.52B	1.41B	1.70B	1.74B	1.49B
Investing Cash Flow	-15.91B	1.22B	-482.10M	-572.62M	-549.03M
Financing Cash Flow	13.39B	-181.30M	-1.20B	-1.12B	-748.75M

Synopsys Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 475.47
• 50DMA: Positive
• 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 Positive. The current price of 475.47 is above the 20-day moving average (MA) of 455.06, above the 50-day MA of 436.17, and below the 200-day MA of 488.93, indicating a neutral trend. The MACD of 11.37 indicates Negative momentum. The RSI at 61.71 is Neutral, neither overbought nor oversold. The STOCH value of 67.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SNPS.

Synopsys Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADBE	80 Outperform	$147.52B	21.10	55.43%	―	10.53%	34.24%
SNPS	73 Outperform	$90.97B	59.26	7.16%	―	12.62%	-45.12%
PANW	73 Outperform	$131.12B	119.32	15.33%	―	15.30%	-60.71%
FTNT	71 Outperform	$59.98B	33.21	228.04%	―	14.78%	22.52%
ORCL	66 Neutral	$561.24B	36.71	70.60%	1.00%	11.08%	29.56%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ZS	60 Neutral	$36.57B	-873.93	-2.41%	―	23.24%	-8.83%

Synopsys Corporate Events

Synopsys and NVIDIA Announce $2 Billion Partnership

On December 1, 2025, Synopsys, Inc. and NVIDIA Corporation announced an expanded strategic partnership, marked by NVIDIA’s $2 billion investment in Synopsys’ common stock. This collaboration aims to revolutionize design and engineering across industries by integrating NVIDIA’s AI and accelerated computing with Synopsys’ engineering solutions. The partnership will focus on enhancing simulation speed and scale, advancing AI engineering, and developing digital twins, thereby opening new market opportunities and enabling more efficient innovation for R&D teams in sectors such as semiconductor, aerospace, and automotive.

Synopsys Announces Major Restructuring Plan

On November 9, 2025, Synopsys, Inc. announced a restructuring plan approved by its Board of Directors, which will lead to a 10% reduction in its workforce by the end of fiscal year 2025. This strategic move follows the acquisition of ANSYS, Inc. and aims to enhance business efficiencies and invest in growth opportunities. The restructuring is expected to incur pre-tax charges between $300 million and $350 million, with most workforce reductions occurring in fiscal year 2026 and completion anticipated by the end of fiscal year 2027.

Synopsys Announces Departure of Chief Revenue Officer

On November 4, 2025, Synopsys announced the immediate departure of Rick Mahoney from his role as Chief Revenue Officer and is actively searching for a replacement. Despite this leadership change, Synopsys reaffirms its financial targets for the fourth quarter and full fiscal year 2025, indicating stability in its operations and confidence in meeting its financial goals.