The AI Chip Race Is Getting Crowded. This Company Has Another Advantage

Synopsys (NASDAQ:SNPS | SNPS Price Prediction) trades at $442.83. The 24/7 Wall St. price target is $581.36 over the next 12 months, which implies 32.03% upside. The model gives the stock a buy with high confidence.

24/7 Wall St. Price Target Summary

Every AI accelerator, custom ASIC and multi-die package has to be designed, verified and simulated before it reaches a foundry.

Synopsys sells the tools for that work, and the Ansys acquisition added physics simulation that pure-play EDA rivals lack (we covered seven other companies driving the AI expansion, from design software to driving and cooling, in a free report you can grab here). That silicon-to-systems reach is the advantage in our title, and the recent decline has lowered its valuation.

A 12% Monthly Slide Masks a Fourth Straight Earnings Beat

Shares fell 9.66% over the past week and 12.34% over the past month, leaving the stock down 5.72% year to date. Synopsys sits 17.9% below its 52-week peak of $539.48 while staying 22.1% over its low of $362.55.

Fiscal Q3 revenue rose 42.4% to $2.48 billion, ahead of the $2.44 billion consensus, and non-GAAP EPS of $3.91 topped the $3.6733 estimate. That marked a fourth consecutive beat. Management raised full-year non-GAAP EPS guidance to $15.04 to $15.10.

Ansys Integration Could Drive Synopsys Past $600

Multiphysics Fusion, the first joint Synopsys-Ansys product, delivered up to 10x faster design closure for customers including NVIDIA (NASDAQ:NVDA) and Samsung Foundry.

Management expects it to contribute to EDA growth in fiscal 2027. CEO Sassine Ghazi put it simply: “You cannot build these systems without taking into account physics, thermal, structure, fluid into the chip design phase.”

Synopsys is also going after more than 30 agentic AI customer engagements and a push to shift custom IP deals toward royalties. Wall Street agrees, with 23 Buy or Strong Buy ratings against 2 Holds. The bull case reaches $603.38.

Debt, China and GAAP Earnings Could Slow the Rally

Organic EDA growth was 8.5% in Q3, total debt sits near $10 billion, and guidance assumes no new export restrictions. GAAP EPS guidance of $3.84 to $4.08 trails the non-GAAP figure by a wide margin.

That gap reflects roughly $404 million of quarterly non-cash amortization and $200 million to $250 million in restructuring. Still, Q3 faced a 16% compare, and management guided to double-digit EDA growth in Q4. The bear case still lands at $504.84.

Synopsys Trades at a Discount to Its Closest Rival

Cadence is the closest EDA competitor. It earns a 28.9% TTM operating margin and commands a higher multiple despite slower growth. Much of Synopsys’ growth is acquired through Ansys, but the multiple gap still looks wide.

Keysight shares AI-infrastructure exposure through electronic design and test. At 19x forward earnings, it is the cheapest of the three. Our target implies roughly 32x forward EPS, which sits below Cadence’s multiple. The peer group makes our 24/7 Wall St. price target look reasonable.

Our Price Target Points to 32% Upside for Synopsys

The 24/7 Wall St. price target of $581.36 carries a buy rating at 90% confidence. Key to the call is the Ansys-powered physics edge that Cadence cannot easily copy.

Double-digit EDA growth in Q4 would support the thesis. Tighter export rules or slowing IP growth would hurt it.

The projections rest on Synopsys continuing to execute on the Ansys integration and AI-driven design demand. Royalty-based IP deals could add upside, while export controls remain the largest downside risk.

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