Synopsys
SNPS
$397.17
+1.00%
Synopsys Inc. is a leading provider of electronic design automation (EDA) software and semiconductor intellectual property (IP), enabling the design and verification of complex integrated circuits and electronic systems. As one of the 'big three' EDA vendors alongside Cadence and Siemens EDA, Synopsys holds a dominant market position, benefiting from the convergence of semiconductor and systems companies investing in custom chip design. The current investor narrative centers on the company's AI-driven growth opportunities, underscored by a strong Q3 earnings beat and raised guidance, yet shares have faced volatility due to concerns about organic growth following the Ansys acquisition and broader market sell-offs in tech.…
SNPS
Synopsys
$397.17
Related headlines
Investment Opinion: Should I buy SNPS Today?
We rate SNPS as a Hold, with a cautious tilt toward accumulation on further weakness. The consensus analyst rating is Buy with an average target of $544.97, implying 38.4% upside, but the stock's persistent downtrend and organic growth concerns warrant a more measured stance. The thesis is that Synopsys is a high-quality EDA leader with strong AI tailwinds, but the current price does not yet reflect a compelling margin of safety given the integration risks.
Sign up to view all
SNPS 12-Month Price Forecast
The AI assessment is neutral with medium confidence. While Synopsys benefits from AI-driven demand for EDA tools, the stock's recent underperformance and valuation concerns temper enthusiasm. The forward PE of 22.5x is reasonable if EPS grows as expected, but the market is pricing in significant execution risk. To upgrade to bullish, we would need to see evidence of accelerating organic growth and successful Ansys integration. Conversely, a downgrade to bearish would be triggered by a miss on guidance or further deterioration in relative strength.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Synopsys's 12-month outlook, with a consensus price target around $544.97 and implied upside of +37.2% versus the current price.
Average Target
$544.97
0 analysts
Implied Upside
+37.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$415 - $633
Analyst target range
The target price range spans from a low of $414.77 to a high of $633.00, indicating a wide dispersion of expectations. The high target of $633.00 suggests that some analysts see significant upside potential, likely driven by AI-driven demand for EDA tools and successful integration of Ansys, while the low target of $414.77 implies a more conservative view, possibly factoring in integration risks or macroeconomic headwinds. The wide spread between the low and high targets (over 50% difference) highlights the uncertainty surrounding the stock's future performance, but the overall bullish consensus and recent upgrades suggest that analysts see the current pullback as an opportunity.
Bulls vs Bears: SNPS Investment Factors
Synopsys presents a classic growth-at-a-reasonable-price dilemma. The bull case is anchored by strong revenue growth (41.9% YoY), a dominant EDA franchise, and a consensus Buy rating with 38% upside to the average target. However, the bear case highlights a 34.6% stock decline, concerns about organic growth masked by Ansys, and a rich trailing valuation. Currently, the bearish momentum is stronger in the near term, as evidenced by negative relative strength and the stock trading near its 52-week low. The central tension is whether the Ansys acquisition will ultimately drive sustained earnings growth (justifying the forward PE of 22.5x) or whether integration and organic growth challenges will persist, keeping the stock under pressure. Resolution of this tension will likely determine the stock's direction over the next 12 months.
Bullish
- Strong Q2 revenue growth of 41.9%: Revenue surged to $2.276B in Q2 FY2026, up 41.87% YoY, driven by the Ansys acquisition and robust EDA demand. This growth outpaces the broader software sector and underscores the company's ability to capitalize on AI-driven chip design complexity.
- Raised guidance and Q3 beat: Synopsys delivered a Q3 beat and raised guidance, reflecting strong AI-driven demand for chip design software. This positive momentum suggests the company is executing well despite market volatility, with analysts maintaining a Buy consensus.
- Dominant EDA market position: As one of the 'big three' EDA vendors, Synopsys benefits from the convergence of semiconductor and systems companies investing in custom chip design. This secular tailwind supports long-term revenue growth and pricing power.
- High gross margin of 77%: Gross margin stands at 76.98%, reflecting the software-like economics of EDA tools. This high margin provides a strong foundation for profitability and cash flow generation, even amid integration costs.
Bearish
- Stock down 34.6% over one year: SNPS has declined 34.57% over the past year, significantly underperforming the S&P 500, which rose 18.65%. This persistent downtrend reflects concerns about organic growth and integration risks, eroding investor confidence.
- Organic growth concerns post-Ansys: The Ansys acquisition masks underlying organic growth, with recent quarters showing deceleration from 60%+ growth in Q1 FY2026 to 41.9% in Q2. Excluding Ansys, core EDA growth appears weaker, raising questions about the sustainability of the top-line expansion.
- High trailing PE of 55.8x: The trailing PE of 55.82x is elevated, reflecting high market expectations. If earnings growth disappoints, the stock could face multiple compression, amplifying downside risk.
- Negative relative strength across timeframes: Relative strength is deeply negative: -53.2% over 1 year, -19.7% over 3 months, and -1.8% over 1 month. This indicates persistent underperformance versus the market, suggesting a lack of buying interest and potential further downside.
SNPS Technical Analysis
Synopsys is in a pronounced downtrend, with the stock price at $393.84 as of September 4, 2026, reflecting a 1-year decline of 34.57%. The current price sits near the lower end of its 52-week range, at approximately 8.5% above the 52-week low of $366.00 and 36% below the high of $615.79. This positioning near the lows suggests bearish sentiment and potential value opportunity, but also indicates persistent selling pressure and a lack of buyer conviction.
Beta
1.23
1.23x market volatility
Max Drawdown
-40.5%
Largest decline past year
52-Week Range
$366-$539
Price range past year
Annual Return
+2.4%
Cumulative gain past year
| Period | SNPS Return | S&P 500 |
|---|---|---|
| 1m | -3.3% | -1.6% |
| 3m | -12.5% | +2.2% |
| 6m | -3.7% | +14.4% |
| 1y | +2.4% | +16.2% |
| ytd | -17.3% | +11.1% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
SNPS Fundamental Analysis
Synopsys' revenue trajectory shows robust growth, with the most recent quarter (Q2 FY2026, ended April 30, 2026) reporting revenue of $2.276 billion, a 41.87% year-over-year increase. This growth is partly driven by the Ansys acquisition, which closed in Q3 FY2025, and the company has consistently delivered revenue growth over the past several quarters, albeit with some deceleration from the 60%+ growth seen in Q1 FY2026. The revenue mix includes License and Maintenance ($945.6M), License ($546.3M), and Technology Services ($784.1M) segments, with the core EDA business driving demand amid AI and semiconductor complexity trends.
Quarterly Revenue
$2.3B
2026-04
Revenue YoY Growth
+41.9%
YoY Comparison
Gross Margin
72.3%
Latest Quarter
Free Cash Flow
$2.7B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is SNPS Overvalued?
Given that Synopsys has positive net income (TTM net income of $1.71 billion), the PE ratio is the primary valuation metric. The trailing PE stands at 55.82x, while the forward PE is 22.49x, indicating the market expects significant earnings growth. The gap between trailing and forward PE suggests that the market is pricing in a substantial increase in earnings, likely due to the Ansys acquisition and operational leverage. This forward multiple is more reasonable but still reflects a premium valuation for a company with strong growth prospects.
PE
55.8x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 37x~73x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
33.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financially, Synopsys carries moderate debt with a debt-to-equity ratio of 0.50, and interest expenses of $133M in Q2 FY2026, which could pressure net margins if rates stay high. The company's net margin was only 0.75% in Q2, down from 21.5% a year earlier, due to acquisition-related costs and amortization, highlighting earnings volatility. Free cash flow remains strong at $2.68B TTM, but the high EV/EBITDA of 33.6x suggests the market is pricing in significant future growth, leaving little room for error. Revenue concentration in the semiconductor industry is a risk, as a downturn in chip design spending could disproportionately impact results.