Synopsys (SNPS) AI Stock Analysis

• Market Cap: $84.62B
• Dividend Yield: N/A
• Average Volume (3M): 2.07M
• Price to Earnings (P/E): 55.1
• 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): 2.90
• Shares Outstanding: 191,318,200
• 10 Day Avg. Volume: 1,887,896
• 30 Day Avg. Volume: 2,070,445
• 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: 1.09
• Enterprise Value/Revenue: 13.03
• Enterprise Value/Gross Profit: 16.93
• Enterprise Value/Ebitda: 36.77
• 1Y Price Target: $545.00
• Price Target Upside: 29.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): 14.38
• Revenue Forecast (FY): $9.62B

• Rating: 69 Neutral
• Price Target: $484.00 ▲(15.01% Upside)
• Action: Reiterated Date: 02/20/26
• Date: Action: Reiterated 02/20/26

SNPS scores highest on financial quality (strong revenue growth, high gross margins, healthy cash flow) and a generally positive FY2026 outlook with improving margin guidance. The score is held back by weak technical momentum (below key moving averages with negative MACD) and a premium valuation (P/E ~55) with no dividend yield support, alongside risks from China softness and Design IP segment pressure.

Positive Factors

Recurring subscription model & IP revenue

Synopsys' subscription licensing and semiconductor IP mix create predictable, recurring revenue and diversified cash flows. This reduces revenue volatility across cycles, supports sustained R&D investment and long-term customer relationships, and enhances visibility into multi-quarter demand and renewal economics.

High gross margins and strong cash generation

Sustained gross margins near 77% and positive free cash flow growth indicate durable operating leverage and efficient cash conversion. That cash generation funds R&D, strategic M&A, and debt reduction, bolstering financial flexibility and supporting margin sustainability over the medium term.

ANSYS integration and NVIDIA partnership

The ANSYS integration (material revenue contribution) plus a $2B strategic partnership with NVIDIA represent structural upgrades: broadened product scope, AI-driven tool acceleration, and deeper ecosystem ties. These strengthen competitive differentiation and open sustained TAM expansion in AI and systems engineering.

Negative Factors

Profitability deterioration

A large drop in net margin and weakening EBIT/EBITDA margins signal persistent cost or integration pressures that could erode earnings power if not reversed. Lower profitability reduces cash cushion, constrains reinvestment flexibility and makes operating leverage less effective in downturns.

China market weakness

An outsized China revenue decline driven by restrictions and subdued demand is a structural risk given the region's importance to semiconductors. Continued weakness or regulatory barriers can meaningfully slow growth and limit addressable market gains over multiple quarters.

Design IP segment headwinds

An 8% drop and muted outlook for Design IP reflects competitive or demand pressure in a core product area. Persistent softness in IP licensing undermines revenue diversification and could force higher investment to regain share, pressuring margins and long-term growth profiles.

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 top-line momentum (9.7% revenue growth) and very high gross margin (76.98%) support a solid fundamental profile. The main offset is materially weaker profitability versus last year (net margin down to 18.96% from 36.94%) alongside declining EBIT/EBITDA margins, indicating cost pressure even as cash generation remains healthy (positive free cash flow growth).

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	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	7.05B	6.13B	5.32B	4.62B	4.20B
Gross Profit	5.43B	4.88B	4.29B	3.72B	3.34B
EBITDA	2.50B	1.85B	1.56B	1.33B	1.01B
Net Income	1.33B	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: Negative
• Last Price: 420.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 420.82 is below the 20-day moving average (MA) of 446.90, below the 50-day MA of 472.63, and below the 200-day MA of 496.75, indicating a bearish trend. The MACD of -13.74 indicates Positive momentum. The RSI at 38.70 is Neutral, neither overbought nor oversold. The STOCH value of 55.62 is Neutral, 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
ADBE	74 Outperform	$108.03B	15.52	55.43%	―	10.53%	34.24%
FTNT	72 Outperform	$60.00B	33.66	135.72%	―	14.78%	22.52%
PANW	72 Outperform	$124.32B	83.55	16.26%	―	15.30%	-60.71%
SNPS	69 Neutral	$84.62B	55.14	7.16%	―	12.62%	-45.12%
ORCL	65 Neutral	$448.85B	29.35	70.60%	1.00%	11.08%	29.56%
ZS	62 Neutral	$27.45B	―	-2.41%	―	23.24%	-8.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Synopsys Corporate Events

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.

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.

The most recent analyst rating on (SNPS) stock is a Buy with a $510.00 price target. To see the full list of analyst forecasts on Synopsys stock, see the SNPS Stock Forecast page.