Synopsys Inc stock falls amid broad market weakness
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 18 2024
0mins
Should l Buy SNPS?
Synopsys Inc's stock price decreased by 5.00% as it crossed below the 5-day SMA, reflecting a challenging trading environment.
The decline in Synopsys Inc's stock is primarily attributed to broad market weakness, with the Nasdaq-100 down 1.60% and the S&P 500 down 1.06%. This market trend has influenced investor sentiment, leading to a sell-off in technology stocks, including Synopsys.
As the market continues to face pressure, investors may need to reassess their positions in technology stocks, particularly those like Synopsys that are experiencing significant price movements.
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Analyst Views on SNPS
Wall Street analysts forecast SNPS stock price to rise
12 Analyst Rating
10 Buy
2 Hold
0 Sell
Strong Buy
Current: 421.950
Low
500.00
Averages
565.64
High
602.00
Current: 421.950
Low
500.00
Averages
565.64
High
602.00
About SNPS
Synopsys, Inc. is engaged in providing engineering solutions from silicon to systems, enabling customers to innovate artificial intelligence (AI)-powered products. It delivers silicon design, intellectual property (IP), simulation and analysis solutions, and design services. It supplies mission-critical electronic design automation (EDA) software that engineers use to design and test integrated circuits (ICs). Its Design Automation segment includes its advanced silicon design, verification products and services and system integration products. This segment also includes digital, custom and field programmable gate arrays, integrated circuit design software, verification software and hardware products, system integration products and services, and manufacturing software products. Its Design IP segment includes its interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services that serve companies in the semiconductor and electronics industries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Legal Risks: The investigation may uncover potential missteps by Synopsys in handling trade secrets and contractual obligations, and if violations are confirmed, it could negatively affect the company's reputation and financial standing.
- Investor Attention: KSF encourages long-term Synopsys shareholders to provide information, indicating that potential legal actions arising from this case could directly impact shareholder returns and the company's future market performance.
See More
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- Significant Contribution from System Companies: CEO Anirudh Devgan highlighted that around 45% of the business now comes from 'system companies', including hyperscalers and end producers of phones and cars, reflecting a growing demand for integrated hardware and software design solutions.
- AI-Driven Capital Expenditures: The company is benefiting from increased R&D and capital expenditures by tech enterprises focused on artificial intelligence, particularly in developing large language models, positioning Cadence as a key player in the rapidly evolving AI market.
- Optimistic Revenue Outlook: Cadence expects revenue between $5.9 billion and $6 billion for the next fiscal year, aligning closely with FactSet's upper estimate of $5.94 billion, demonstrating management's confidence in sustained market demand and future growth.
See More
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- Earnings Surprise: Cadence Design Systems reported an adjusted EPS of $1.99 and revenue of $1.44 billion for Q4 2025, marking a 6% year-over-year increase and surpassing analyst expectations of $1.91 EPS and $1.42 billion revenue, indicating robust market performance.
- Accelerating Custom Chip Trend: CEO Anirudh Devgan highlighted that approximately 45% of the company's business now comes from 'system companies,' including hyperscalers and end producers of smartphones and cars, reflecting a rapid increase in demand for custom chips in the market.
- AI-Driven Capital Expenditures: The company is benefiting from significant investments in artificial intelligence-related R&D by various tech enterprises, particularly in the development and application of large language models, further solidifying its leadership in the chip design software sector.
- Future Revenue Outlook: Cadence expects revenue for the next fiscal year to be between $5.9 billion and $6 billion, aligning closely with FactSet's expectation of $5.94 billion, demonstrating confidence in future growth prospects.
See More
Stocks related to NVIDIA saw an overall increase, with Synopsys, CoreWeave, and NEBIUS jumping more than 5%, Nokia up nearly 2%, and Intel climbing close to 1%.
NVIDIA's Stock Performance: NVIDIA's holdings-related stocks generally rose, indicating positive market sentiment.
Other Companies' Gains: Synopsys, Core Weave, and NEBIUS surged over 5%, while Nokia gained nearly 2% and Intel rose almost 1%.
See More
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- Nvidia's Stake Sale: Nvidia's SEC filing on Tuesday revealed it has offloaded its stake in semiconductor firm Arm, yet this does not signify the end of their relationship, as Arm's shares rose 1.4% in premarket trading on Wednesday.
- Shareholding History: By the end of Q3, Nvidia held 1.1 million shares of Arm valued at $155.8 million, having maintained its stake since 2023 while gradually winding it down towards the end of 2024, indicating a strategic shift in its investment approach.
- Market Reaction: When Arm debuted on Nasdaq in 2023, Nvidia was part of a strategic investment group that collectively purchased $735 million in shares, and although its $40 billion acquisition bid failed due to regulatory hurdles, Nvidia retains a 20-year licensing agreement with Arm, continuing to support its technology.
- Financial Performance: Arm's recent earnings report showed a 26% year-on-year sales increase to $1.24 billion, exceeding analyst expectations, although shares fell in after-hours trading, with analysts noting high operating expenses suggest the company is preparing for long-term demand.
See More
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- Nvidia Reduces ARM Stake: Nvidia gradually reduced its stake in ARM by the end of 2024, holding 1.1 million shares valued at $155.8 million; despite the sell-off, Nvidia's 20-year licensing agreement with ARM remains intact, indicating a long-term partnership.
- ARM Earnings Beat Expectations: ARM reported a 26% year-on-year increase in sales to $1.24 billion in its latest earnings report, surpassing analyst expectations and demonstrating strong momentum in AI projects, although its stock fell in after-hours trading, reflecting cautious market sentiment regarding future guidance.
- Positive Market Reaction: Following its Nasdaq debut, ARM's market cap is approximately $135 billion, and Nvidia's stake reduction did not dampen market confidence, as ARM shares rose 1.4% in premarket trading, indicating investor recognition of its long-term growth potential.
- Morgan Stanley Optimistic: Morgan Stanley has an “overweight” rating on ARM with a price target of $135, representing a premium of over 6% from Tuesday's closing price, reflecting a positive outlook on ARM's future performance, particularly in ongoing investments in AI.
See More
KSF Launches Investigation into Synopsys, Inc.
- Investigation Launched: Kahn Swick & Foti has initiated an investigation into Synopsys, Inc., focusing on whether its executives breached fiduciary duties to shareholders, which could impact corporate governance and shareholder rights.
- Lawsuit Progress: Cangrade, Inc. filed a lawsuit against Synopsys in February 2025 in the Northern District of California, alleging trade secret misappropriation during a software audit, with the court partially denying Synopsys' motion to dismiss, allowing the case to proceed.
- Legal Risks: The investigation may uncover potential missteps by Synopsys in handling trade secrets and contractual obligations, and if violations are confirmed, it could negatively affect the company's reputation and financial standing.
- Investor Attention: KSF encourages long-term Synopsys shareholders to provide information, indicating that potential legal actions arising from this case could directly impact shareholder returns and the company's future market performance.
See More
