Buy, Sell or Hold Synopsis Below $500?
Synopsys (NASDAQ:SNPS | SNPS Price Prediction) below $500 looks priced for an AI story the business does not fully support. The AI multiple attached to this stock fits worse than the valuation implies, and…
Coverage ended
6 updates · Last at 4:47pm ET
Live: Will Synopsys Beat Earnings After the Bell?
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Live Updates
Newest first<h2>Earnings Scorecard: Synopsys Q1 FY2026</h2><p><strong>Overall Grade: B+</strong> - Synopsys beat on both revenue and earnings, with the Ansys acquisition driving Design Automation growth. Cash flow was a standout. The drag: Design IP struggles, GAAP profits pressured by acquisition debt, and management reiterated rather than raised full-year guidance. Solid execution, but not a blowout.</p><table><thead><tr><th>Category</th><th>Grade</th><th>Notes</th></tr></thead><tbody><tr><td>Revenue Performance</td><td>A</td><td>$2.41B revenue, +65.4% YoY, at the upper end of guided range.</td></tr><tr><td>Earnings Beat/Miss</td><td>A</td><td>Non-GAAP EPS of $3.77 beat the $3.56 estimate by 5.9%, extending the beat streak.</td></tr><tr><td>Guidance Quality</td><td>B</td><td>Full-year guidance reiterated at $9.56B–$9.66B, not raised.</td></tr><tr><td>Margin Trends</td><td>B-</td><td>Design Automation margins expanded to 47.3%, but Design IP compressed from 29.1% to 16.2%.</td></tr><tr><td>Cash Flow</td><td>A</td><td>Operating cash flow surged to $856.8M from -$67.5M a year ago.</td></tr><tr><td>Management Confidence</td><td>B+</td><td>CEO Ghazi called this "the most compelling roadmap in our history", though IP headwinds remain.</td></tr></tbody></table>
Earnings Scorecard: Synopsys Q1 FY2026
Overall Grade: B+ – Synopsys beat on both revenue and earnings, with the Ansys acquisition driving Design Automation growth. Cash flow was a standout. The drag: Design IP struggles, GAAP profits pressured by acquisition debt, and management reiterated rather than raised full-year guidance. Solid execution, but not a blowout.
| Category | Grade | Notes |
|---|---|---|
| Revenue Performance | A | $2.41B revenue, +65.4% YoY, at the upper end of guided range. |
| Earnings Beat/Miss | A | Non-GAAP EPS of $3.77 beat the $3.56 estimate by 5.9%, extending the beat streak. |
| Guidance Quality | B | Full-year guidance reiterated at $9.56B–$9.66B, not raised. |
| Margin Trends | B- | Design Automation margins expanded to 47.3%, but Design IP compressed from 29.1% to 16.2%. |
| Cash Flow | A | Operating cash flow surged to $856.8M from -$67.5M a year ago. |
| Management Confidence | B+ | CEO Ghazi called this “the most compelling roadmap in our history”, though IP headwinds remain. |
Guidance
After last quarter’s results, the next key area to watch is guidance.
Synposys proejcted to $2.23B to $2.28 (topping expectations).
Adjusted EPS of $3.11 to $3.17 tops expectations of $3.07.
That’s a beat, but not as impressive as the beat last quarter, which is likely limiting the ‘upside’ from this earnings report.
Shares are currently up 1.6%.
Synposys Earnings Are Out
Synopsys earnings are out. Here’s the headline figures:
- Revenue: $2.409 billion
- Adjusted EPS: $3.77
As a reminder, here’s what Wall Street expected:
- Revenue: $2.391 billion
- Adjusted EPS: $3.56
Shares have immediately popped by 3% in reaction.
Guidance is What Matters Tonight
The actual Q1 results will matter, but what moves Synopsys shares after the bell will likely be management’s tone around the outlook. Heading in, the company’s own guidance calls for Q1 non-GAAP EPS of $3.52 to $3.58 and revenue of $2.365B to $2.415B. Meeting that bar is the floor, not the ceiling.
The real question is whether management raises confidence in the $9.61B full-year revenue target.
Bullish guidance would include stronger Ansys momentum and signs that China headwinds are stabilizing.
Bearish signals would be any downward revision to the IP segment or caution on second-half revenue weighting, already flagged as 52% back-half loaded. With Synopsys beating EPS estimates in 7 of the last 8 quarters, the beat is almost expected. The guidance narrative is what analysts and market watchers will be focused on after the bell.
Synposys Bull and Bear Case Tonight
The Bull and Bear Case for Tonight
With Synopsys reporting after the close tonight, here is where both sides stand heading into the print.
Bull Case
- Guidance calls for Q1 revenue of $2.365B to $2.415B and non-GAAP EPS of $3.52 to $3.58, a step up from Q4.
- Ansys is expected to be its strongest quarter sequentially, driven by December seasonality.
- 19 of 25 analysts rate the stock a Buy, with average price targets implying over 23% upside.
- AI chip design demand remains a structural tailwind for EDA tools.
Bear Case
- Design IP is expected to deliver only muted, low-to-mid single-digit growth, the same weakness flagged after Q3.
- HSBC downgraded the stock on Feb 21, calling 2026 a transition year with limited near-term catalysts.
- China revenue headwinds persist, with management assuming no improvement in the challenging environment for FY2026.
- Ansys integration complexity introduces execution risk.
Synopsys Shares Rising Today
Synposys shares are up 2.2% as of 1:25 p.m. ET.
Software stocks have generally been bouncing back in recent days after a continued sell-off across 2026. We’ll see if tonight’s earnings turn around negative negative sentiment which began when Synopsys badly missed Q3 earnings after revealing its IP business would struggle.
We’ve flagged IP commentary as one of the key subjects to watch in tonight’s earnings. We expect Synposys to report at about 4:05 p.m. ET. Simply stay on this page to receive updates and analysis on the stock’s movement after earnings are released.
Live coverage has ended. The full story is below.
Full Coverage
The story so farSynopsys (Nasdaq: SNPS | SNPS Price Prediction) reports its Q1 fiscal 2026 earnings after the market close tonight. Shares are trading around $446, down roughly 5% year to date and off 11% over the past month as the broader software sector has faced pressure in early 2026. Yet, sentiment is changing. Shares are up 7% since Monday’s close. Let’s take a deeper look at what Synopsys is expected to report tonight.
What Wall Street Expects Tonight
Management provided explicit Q1 guidance on the last earnings call. The company guided for revenue of $2.365 billion to $2.415 billion, with a midpoint of roughly $2.39 billion. On the earnings side, guidance called for non-GAAP EPS of $3.52 to $3.58. That represents a meaningful step up from Q4’s $2.90 non-GAAP EPS, largely reflecting a full quarter of Ansys contribution and early cost synergy benefits from the 10% workforce reduction announced last fall.
Wall Street’s expectations are close to what Synopsys provided:
- Revenue: $2.391 billion
- Adjusted EPS: $3.56
Looking ahead to Q2 (expected guidance for next quarter), here’s expectations:
- Revenue: $2.243 billion
- Adjusted EPS: $3.08
Last Quarter Recap
In Q4 fiscal 2025, Synopsys posted non-GAAP EPS of $2.90, beating the consensus estimate of $2.88. Revenue came in at $2.255 billion, which slightly topped expecatations of $2.235 billion.
The Ansys segment contributed $667.7 million in Q4 revenue, while the Design IP segment at $407.2 million continued to show pressure from China export restrictions and execution gaps in custom IP delivery.
The stock reaction was measured. Shares rose about 2.6% the day after the Q4 report, then pulled back before recovering to gain nearly 13% over the following 30 days. Much of that recovery was driven by the announcement that Nvidia invested $2 billion in Synopsys common stock, a major strategic endorsement that sent shares sharply higher in the weeks following the Q4 report.
Key Things to Watch Tonight
- IP segment recovery timeline. This is the most pressing question. CFO Shelagh Glaser said on the Q4 call that “IP will be back half-loaded” due to product delivery timing. Watch whether Q1 IP revenue shows any sequential stabilization or whether the weakness is tracking worse than management projected.
- China exposure and export control impact. China revenue fell 22% in fiscal 2025 excluding Ansys and exited the year at roughly 10% of total revenue. Any commentary on whether restrictions have intensified or stabilized will move the stock. Management assumed a challenging environment in guidance, so a further deterioration would be a negative surprise.
- Ansys integration progress. The company guided for $2.9 billion in Ansys revenue for the full year with double-digit growth. Q1 will be the first clean quarter to assess whether that trajectory is holding. CEO Sassine Ghazi noted that “our R&D teams right now, they’re one team” and that joint solutions with Synopsys EDA products are in active development.
- Margin expansion confirmation. Full-year guidance calls for a non-GAAP operating margin of roughly 40.5%, up about 320 basis points from fiscal 2025. Q1 will be an early read on whether the cost synergies from the workforce reduction are flowing through as planned. The company also has $2.55 billion in debt it plans to prepay in 2026, so free cash flow commentary will matter.
With the stock down meaningfully from its highs and the Nvidia partnership adding a new strategic dimension, tonight’s report is less about one quarter and more about whether Synopsys can prove that the Ansys transformation is delivering the growth and margin profile management promised when they closed the deal.
Contact [email protected] for any questions or corrections.
Eric Bleeker
Eric Bleeker, CFA has been investing for more than 20 years. He began his career working at Microsoft before joining Motley Fool, one of the largest publishers of financial research. In his 15 years at Motley Fool Eric served as the General Manager for Fool.com and led coverage in the Technology & Telecom sector. In addition, he was a featured columnist and has hosted dozens of investing seminars attended by more than a million total investors. Eric has more than 1,000 financial bylines to his name and has been featured in The Wall Street Journal, CNBC, Fox Business, and many other leading publications. He is currently focused on artificial intelligence investing and is a CFA Charterholoder.
