Synopsys (SNPS) AI Stock Analysis

• Market Cap: $74.44B
• Dividend Yield: N/A
• Average Volume (3M): 2.31M
• Price to Earnings (P/E): 31.0
• Beta (1Y): 1.63
• Revenue Growth: 3.21%
• EPS Growth: 31.64%
• Country: US
• Employees: 20,000
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 3.39
• Shares Outstanding: 185,748,670
• 10 Day Avg. Volume: 2,695,489
• 30 Day Avg. Volume: 2,305,171
• PEG Ratio: 0.42
• Price to Book (P/B): 8.75
• Price to Sales (P/S): 12.84
• P/FCF Ratio: 61.26
• Enterprise Value/Market Cap: 1.54
• Enterprise Value/Revenue: 17.88
• Enterprise Value/Gross Profit: 22.99
• Enterprise Value/Ebitda: 62.36
• 1Y Price Target: $559.38
• Price Target Upside: 40.26% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: $429.00 ▲(7.57% Upside)

Synopsys' strong financial performance and strategic acquisitions are offset by technical weakness and valuation concerns. The company's ability to generate cash and expand its portfolio through acquisitions like ANSYS supports its growth prospects. However, bearish technical indicators and geopolitical challenges in the IP segment present risks. Investors should consider these factors when evaluating Synopsys' stock.

Positive Factors

Revenue Growth

Strong revenue growth driven by design automation and ANSYS acquisition demonstrates Synopsys's expanding market reach and product adoption.

Strategic Acquisition

The acquisition of ANSYS positions Synopsys as a leader in engineering solutions, enhancing its competitive advantage and long-term growth potential.

Cash Generation

Strong cash generation capabilities underscore Synopsys's ability to fund operations, invest in growth, and maintain financial stability.

Negative Factors

IP Business Challenges

Underperformance in the IP business due to export restrictions and customer challenges could hinder profitability and growth in this segment.

Geopolitical Risks

Ongoing geopolitical issues in China disrupt operations and pose risks to Synopsys's market presence and revenue in this key region.

Profitability Challenges

Decreasing profitability margins suggest operational challenges, which could impact Synopsys's ability to sustain long-term profit growth.

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 support services, and professional services. Its key revenue streams include software licenses for EDA tools, which are sold on a subscription or perpetual basis, and recurring maintenance fees from existing customers. Additionally, Synopsys earns revenue from its extensive portfolio of IP offerings, which are critical for chip makers. The company also benefits from significant partnerships with leading technology firms and semiconductor manufacturers, which not only enhance its market reach but also contribute to collaborative development efforts. Furthermore, the growing demand for advanced technologies such as artificial intelligence, machine learning, and the Internet of Things (IoT) has expanded Synopsys's customer base, driving revenue growth.

Synopsys Financial Statement Overview

Summary

Synopsys demonstrates strong revenue growth and efficient cost management, as evidenced by a high gross profit margin. However, declining net profit and EBIT margins suggest potential profitability challenges. The balance sheet shows increased leverage, which could pose risks if not managed carefully. Cash flow metrics are strong, with significant free cash flow growth, underscoring the company's ability to generate cash effectively.

Income Statement

Synopsys has demonstrated consistent revenue growth with a TTM (Trailing-Twelve-Months) growth rate of 3.49%. The gross profit margin remains strong at 76.69%, indicating efficient cost management. However, the net profit margin has decreased from 36.96% in the previous year to 31.12% in the TTM, suggesting a decline in profitability. EBIT and EBITDA margins have also decreased, reflecting potential operational challenges.

Balance Sheet

The company's debt-to-equity ratio has increased significantly in the TTM, reaching 0.55, indicating higher leverage. Despite this, the return on equity remains healthy at 14.34%, although it has decreased from 25.17% in the previous year. The equity ratio is stable, suggesting a solid capital structure.

Cash Flow

Free cash flow growth has rebounded to 19.99% in the TTM, showing strong cash generation capabilities. The operating cash flow to net income ratio is 0.42, indicating a moderate conversion of income to cash. The free cash flow to net income ratio remains robust at 0.90, highlighting effective cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.43B	6.13B	5.33B	4.62B	4.20B	3.68B
Gross Profit	5.00B	4.88B	4.10B	3.72B	3.30B	2.85B
EBITDA	1.84B	1.94B	1.65B	1.33B	1.10B	857.40M
Net Income	2.00B	2.26B	1.23B	984.59M	757.52M	664.35M
Balance Sheet
Total Assets	48.23B	13.07B	10.33B	9.42B	8.75B	8.03B
Cash, Cash Equivalents and Short-Term Investments	2.59B	4.05B	1.59B	1.57B	1.58B	1.24B
Total Debt	15.14B	684.46M	677.60M	656.37M	666.77M	663.49M
Total Liabilities	20.62B	4.05B	4.15B	3.86B	3.45B	3.12B
Stockholders Equity	27.61B	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	1.44B	1.41B	1.70B	1.74B	1.49B	991.31M
Investing Cash Flow	-15.00B	1.22B	-482.10M	-572.62M	-549.03M	-360.42M
Financing Cash Flow	14.10B	-181.30M	-1.20B	-1.12B	-748.75M	-140.61M

Synopsys Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 398.81
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNPS, the sentiment is Negative. The current price of 398.81 is below the 20-day moving average (MA) of 435.25, below the 50-day MA of 463.30, and below the 200-day MA of 496.74, indicating a bearish trend. The MACD of -21.20 indicates Positive momentum. The RSI at 33.19 is Neutral, neither overbought nor oversold. The STOCH value of 16.48 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SNPS.

Synopsys Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PANW	78 Outperform	$143.66B	131.27	17.45%	―	14.87%	-57.43%
ADBE	78 Outperform	$137.66B	20.76	52.87%	―	10.69%	35.19%
FTNT	71 Outperform	$61.19B	34.44	228.04%	―	14.78%	22.52%
ZS	71 Outperform	$52.07B	―	-2.70%	―	23.31%	31.04%
SNPS	67 Neutral	$74.44B	30.97	6.61%	―	3.21%	31.64%
ORCL	64 Neutral	$686.56B	55.75	71.15%	0.80%	9.67%	11.23%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Synopsys Corporate Events

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.

The most recent analyst rating on (SNPS) stock is a Hold with a $482.00 price target. To see the full list of analyst forecasts on Synopsys stock, see the SNPS Stock Forecast page.

Synopsys Earnings Call: Growth Amid Challenges

Synopsys’ recent earnings call presented a mixed sentiment, highlighting robust performance in the design automation segment and strategic achievements like the ANSYS acquisition. However, these positives were tempered by significant challenges in the IP business, geopolitical issues in China, and a cautious outlook for the upcoming quarter due to persistent headwinds.

Synopsys Reports Strong Q3 2025 Revenue Growth

Synopsys, Inc. is a leading provider of engineering solutions, specializing in silicon design, IP, simulation, and analysis solutions, serving a broad range of industries to enhance R&D capabilities and productivity.