The More Complicated Chips Become, the More Interesting Synopsys Gets

The More Complicated Chips Become, the More Interesting Synopsys Gets

Vandita Jadeja

Tue, September 22, 2026 at 6:00 PM GMT+3 5 min read

Quick Read

• Synopsys (SNPS) earns a BUY with a $490 price target, representing 27% upside, as AI-driven chip complexity accelerates demand for its design software.

• SNPS trades cheaper than CDNS at 28x versus 30x forward earnings, despite an $11 billion backlog and 42% year-over-year revenue growth.

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Chip design has never been harder. Advanced nodes, chiplet architectures, and AI accelerators are pushing engineering complexity to levels that only a handful of software vendors can address. That reality sits at the center of the bull case for Synopsys (NASDAQ:SNPS), and it drives our price target work today.

Our 24/7 Wall St. price target for Synopsys is $490.29, roughly 27.36% above the recent quote of $400.70. Our recommendation is buy with 90% confidence. The stock has slipped in 2026, but fundamentals and the Ansys deal point higher.

24/7 Wall St. Price Target Summary

A Rough 2026 Masks a Strong Underlying Business

Synopsys shares are down 14.69% year to date and 16.54% over the last year. The 52-week range runs from $362.55 to $539.48.

The operating story is far better. In Q3 FY2026, revenue reached $2.48 billion, up 42.4% year over year, and non-GAAP EPS came in at $3.91 versus $3.67 consensus. Management raised full-year revenue guidance to $9.69 billion to $9.74 billion and non-GAAP EPS guidance to $15.04 to $15.10.

CEO Sassine Ghazi said: "AI is driving unprecedented complexity and increasing demand for the silicon IP and engineering solutions necessary to deliver next-generation AI compute, infrastructure and physical AI systems."

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Why Bulls See a Breakout Ahead

The bull case starts with AI complexity. On the Q2 call, Ghazi said "EDA, IP, and multi-physics simulation have emerged as essential capabilities in the AI supply chain", and Synopsys logged over 30 full-flow technical wins in a single quarter.

Agentic EDA was being evaluated by 20 customers across more than 25 specialized AI agents, hinting at a subscription-plus-consumption model that could reprice the franchise.

Backlog stood at $11 billion, and Ansys carries a reiterated $400 million revenue synergy target. The Street's average analyst target sits at $545.93. Our bull scenario points to $568.67 over 12 months, a 47.72% return.

What Could Go Wrong

The bear case has real teeth. Export controls and the Entity List remain a live risk, guidance assumes no further changes. Long-term debt jumped to $13.46 billion after Ansys, and GAAP profitability is compressed by roughly $404 million per quarter of intangible amortization.

Bulls would argue that amortization is a non-cash artifact of the deal, and management said Q3 free cash flow guidance was already raised by $100 million. The IP segment also had a rough FY2025 but has begun a recovery, growing 12% sequentially in Q2. Our bear scenario puts the stock at $441.09 over 12 months, still up 14.58%.

How Synopsys Compares to Cadence and Broadcom

Cadence Design Systems (NASDAQ:CDNS) is the cleanest peer in the EDA duopoly. Cadence carries a market cap of $77.9 billion, a forward P/E of 30, and an analyst target of $402.12. Synopsys trades cheaper on forward earnings at roughly 28x versus 30x.

Broadcom (NASDAQ:AVGO) is a semiconductor IP and custom-silicon partner to the same hyperscalers Synopsys serves. Broadcom sports a $1.71 trillion market cap and a forward P/E of 19, with quarterly revenue growth of 85.5%. It is cheaper on forward earnings but tied to actual silicon volumes, while Synopsys collects tolls on the design work.

Synopsys Price Prediction 2026-2030

My verdict is a buy with 90% confidence. The 24/7 Wall St. price target is $490.29. Synopsys is compounding EDA growth at double digits while trading at a discount to Cadence as AI complexity accelerates. The September 30 Investor Day could confirm Ansys synergy timing and agentic EDA monetization.

These projections assume Synopsys continues executing on the Ansys integration and captures a share of the agentic EDA opportunity. Meaningful upside or downside could come from hyperscaler custom-silicon demand or a change in export control policy.

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