Start here if you're new
what it is
Synopsys sells the software, chip building blocks, and testing gear engineers use before a chip ever gets manufactured.
how it gets paid
Last year Synopsys made $7.1B in revenue.
why it's growing
Revenue grew 15.1% last year. The 66% revenue jump mattered most because it shows the Ansys-boosted portfolio is already changing the scale of the business.
what just happened
Synopsys posted $2.4B in quarterly revenue, up 66% vs. prior year, while earnings measures told two very different stories.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
95/100 earnings predictability — you can trust these numbers
40.0x trailing p/e — you're paying up for this one
10.5% return on capital — nothing to write home about
xvary composite: 55/100 — below average
What they do
Synopsys sells the software, chip building blocks, and testing gear engineers use before a chip ever gets manufactured.
Synopsys sits inside your customer's design flow. EDA software (chip-design software) → the tools engineers use before a chip exists → so what: ripping it out can delay a launch and cost real money. That stickiness helps support a 95 earnings predictability score and a 73.5% gross margin.
How they make money
$7.1B
annual revenue · their business grew +15.1% last year
total revenue
$7.1B
+15.1%
The products that matter
chip design software and semiconductor IP
Electronic Design Automation
$7.1B revenue · 28.9% net margin
it's the business. all reported revenue lands here, and keeping 28.9% of sales as net profit tells you the tools sit deep in customer workflows. the catch is disclosure: synopsys does not break this page into many neat product buckets, so what you can judge cleanly is the engine's size, growth, and margin profile.
the core engine
pending expansion into simulation
Ansys deal
$35B transaction · ~$2.9B assumed 2026 revenue contribution
this is not booked revenue yet. it's the strategic add-on investors are already underwriting. if approval lands on time, synopsys shows up as a meaningfully bigger company. if it slips or gets reshaped, today's valuation starts looking less patient.
still waiting on yes
Key numbers
40.0x
trailing p/e
P/E (price-to-earnings) → how many years of current profit you're paying for → so what: at 40.0x, you are paying up for execution that still has to happen.
13.0%
operating margin
Operating margin → profit after running the business → so what: that is solid, but it looks thin next to a software stock priced for perfection.
$13.5B
long-term debt
Long-term debt → money owed over many years → so what: the Ansys deal added real balance-sheet weight, even if debt is only 12% of capital.
95
predictability score
Earnings predictability → how steady profits have been historically → so what: this is a very steady business, which is why the market tolerates a rich multiple.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 35 / 100
- long-term debt $13.5B (12% of capital)
- net profit margin 37.0% — keeps 37 cents of every dollar in revenue
- return on equity 14% — $0.14 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in SNPS 3 years ago → it's now worth $15,510.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Synopsys posted $2.4B in quarterly revenue, up 66% vs. prior year, while earnings measures told two very different stories.
Gross margin was 73.5%, which shows the software model is still doing its job. Revenue strength was clear, but EPS data conflicts across sources: one source shows $0.34 GAAP EPS, while the consensus page lists $3.77 adjusted EPS versus a $3.55 estimate.
$2.4B
revenue
$3.77
eps
73.5%
gross margin
the number that mattered
The 66% revenue jump mattered most because it shows the Ansys-boosted portfolio is already changing the scale of the business.
-
synopsys’ fiscal 2025 story shows a much-changed company.this is due to the blockbuster $35 billion acquisition of ansys, which shook up much of the company’s key metrics in the final quarter of fiscal 2025 (year ended october 31st.), reflected in share-count dilution and substantial new long-term debt.
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but also, the technological landscape and economic context has shifted.
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the latest quarter showed diverging demand trends.customers building advanced chips for artificial intelligence (ai) data centers and high-performance computing are pushing ahead, while industrial markets and china remain weaker.
-
china revenue fell 18% in fiscal 2025, and management noted that export restrictions are not just reducing sales, they’re also nudging some customers toward local alternatives, which can become a longer-lasting headwind.
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the year ahead is mostly an execution test.we are calling for $9.6 billion of sales in 2026, with ansys contributing about $2.9 billion, assuming china stays challenging, and other business groups continue to evolve over the year.
source: company earnings report, 2026
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What could go wrong
this story has a very specific pressure point: investors are valuing synopsys partly on a company it has not finished buying yet, while the core business is also dealing with a weaker China backdrop.
med
regulators force a different Ansys deal
the bull case now leans on Ansys. if the FTC blocks the transaction or demands divestitures that materially change the deal, investors lose the cleanest path to the roughly $2.9B of Ansys revenue assumed in the 2026 setup.
impact: the stock would be defending a 40.0x trailing p/e with a smaller growth story than the market is paying for today.
med
China weakness stops looking cyclical
China revenue already fell 18% in fiscal 2025. export restrictions are hurting sales now and may be pushing customers toward local alternatives. that's the line between a temporary slowdown and share loss.
impact: this hits the $7.1B core engine directly, and there is no broad segment mix here to offset it.
med
premium valuation meets flat profit
synopsys still trades at 40.0x trailing earnings while full-year EPS slipped from $13.20 to $12.91. that's workable if growth reaccelerates. it's less workable if margins, demand, or integration disappoint.
impact: when the multiple is this rich, even a temporary miss gets treated like a character flaw.
med
the 2026 revenue bridge proves too ambitious
the current 2026 sales call is $9.6B, and roughly $2.9B of that is expected from Ansys. if timing slips, approval comes later, or the combined revenue base starts lower than expected, the market has to reprice the bridge.
impact: the thesis shifts from "bigger premium software company" back to "excellent core business, but maybe not worth this much right now."
the key insight: this is not a balance-sheet risk story first. it is a valuation-plus-execution story. if the deal gets delayed, China stays weak, and earnings do not accelerate, the stock has less room to be patient than the business does.
source: institutional data · regulatory filings · risk analysis
Pay attention to
risk
ftc decision path on Ansys
the stock is trading with the $35B review in the foreground. approval, delay, or divestiture demands all change what investors think SNPS should be worth.
metric
China revenue trend
China was down 18% in fiscal 2025. you want to see stabilization there, because another leg down makes the local-alternative risk much harder to wave away.
calendar
next guidance update
management's current 2026 sales call is $9.6B, including about $2.9B from Ansys. if that number shifts, management is telling you the merger model changed before saying it that plainly.
trend
AI demand versus everything else
AI data-center and high-performance computing demand is holding up better than industrial and China. you want to see that strength broaden, not stay trapped in one hot pocket.
Analyst rankings
short-term outlook
below average
momentum score 4 — in human-speak, analysts think this can lag in the near term while the merger review and China questions sit on the tape.
risk profile
average
stability score 3 — not fragile, not defensive. you are taking normal market risk plus company-specific deal risk.
chart momentum
bottom 5%
technical score 5 — this chart has been weak. the market wants proof before it pays the premium again.
earnings predictability
95 / 100
management usually lands close to expectations. that matters more when the stock price leaves less room for surprises.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 969 buyers vs. 456 sellers in 3q2025. total institutional holdings: 0.2B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$368
$878
$516
current price
$623
target midpoint · +21% from current · 3-5yr high: $1005 (+95% · 18% ann'l return)
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