Sometimes a quarterly earnings report doesn't just beat expectations—it changes how Wall Street thinks about a company altogether. That's what happened Wednesday when Synopsys, Inc. (SNPS) posted results that had analysts reaching for their upgrade buttons.
The semiconductor design software company reported fourth-quarter adjusted earnings of $2.90 per share on revenue of $2.26 billion, both topping analyst estimates. But the real headline came in the guidance: Synopsys is projecting fiscal 2026 adjusted EPS between $14.32 and $14.40, with revenue landing somewhere between $9.56 billion and $9.66 billion. That's comfortably ahead of what the Street was expecting.
The Upgrade Wave Hits
Bank of America Securities analyst Vivek Arya made the boldest move, upgrading Synopsys from Neutral to Buy and boosting his price target from $500 to $560. His thesis? Synopsys offers what he calls "an attractive, lower-beta way to gain AI exposure in 2026." Translation: you get AI upside without the wild volatility that comes with some of the sector's flashier names.
Arya pointed out that the company has meaningfully reduced risk around China exposure and revenue tied to Intel Corp (INTC), all while riding strong momentum from its $35 billion Ansys acquisition. That combination, he argues, sets up the stock for EPS beats over the next year.
Still, Arya isn't putting all his chips on Synopsys. He continues to favor Cadence Design Systems, Inc (CDNS) as his top pick in the electronic design automation space, citing stronger organic growth, better share-gain potential, deeper ties to Taiwan Semiconductor Manufacturing Company Ltd (TSM), superior free-cash-flow margins, and a cleaner balance sheet.
Looking ahead, Arya sees several potential EPS catalysts: Intel winning more foundry customers, increased demand for joint Synopsys-Ansys products, expanding opportunities in physical AI and robotics, and maybe—just maybe—a recovery in China. His fiscal 2026 estimates call for revenue of $9.61 billion and adjusted EPS of $14.37, with first-quarter revenue hitting $2.39 billion and EPS at $3.55.
What Other Analysts Are Seeing
Rosenblatt analyst Blair Abernethy maintained his Buy rating with a $560 price target, noting that Synopsys delivered fourth-quarter revenue slightly above expectations thanks to a full quarter of Ansys contributions, which grew roughly 10% year-over-year.
But not everything is sunshine and semiconductors. Abernethy flagged Intellectual Property (IP) as a persistent weak spot, now representing just 18% of total revenue. The culprit? A combination of earlier product missteps, China export restrictions, and foundry-related delays. Organically, revenue actually declined about 3% year-over-year, though EDA managed to grow around 6% in the quarter and 7% for fiscal 2025—this despite an 18% revenue plunge in China.
For fiscal 2026, Abernethy expects modest IP growth weighted toward the second half, EDA growth near 8%, and around 10% organic growth at Ansys. His forecasts mirror Arya's for the first quarter, with revenue at $2.39 billion and EPS at $3.55. For the full fiscal year, he's projecting $9.64 billion in revenue and $14.35 in adjusted EPS.
JPMorgan analyst Harlan Sur kept his Overweight rating but raised his price target from $600 to $650—the most bullish call of the bunch. Sur characterized the results as mostly in-line but saw upside in margins and backlog after Ansys contributed its first full quarter.
He's calling fiscal 2026 a "transition year" with guidance that looks roughly in line or possibly conservative, implying high-single-digit growth for core EDA and low- to mid-single-digit growth for Design IP once you strip out divestitures and Ansys revenue.
The real strength, according to Sur, is the $11.4 billion backlog driven by hardware demand, leading-edge software, and large IP programs—this despite headwinds from China and Intel's evolving roadmap. His fiscal 2026 estimates land at $9.65 billion in revenue and $14.39 in adjusted EPS, with first-quarter numbers matching the consensus at $2.39 billion and $3.55.
The Bottom Line
Three analysts, three variations on the same theme: Synopsys is positioned better than expected heading into 2026, the Ansys acquisition is paying off faster than feared, and the company has done a solid job de-risking its China and Intel exposure. Whether that's enough to justify current valuations is another question—the stock traded down 0.59% to $473.03 on Thursday despite all the positive analyst chatter.
But if you're looking for a way to play the AI boom without betting the farm on chips themselves, Synopsys might be the kind of boring-but-profitable story that makes your portfolio look smart a year from now.
